Can the Upcoming Ethereum Merge Rekindle the Crypto Market Bullrun?

Still Below the $2K Position

A few weeks ago, the value of Bitcoin fell so low that it failed to reach its $30,000 mark, causing the price of Ether to plummet. Due to this, the ETH price dropped below the $2k mark. The price of Ether fell below the 50 neutral regions at the time of writing. The Money Flow and Relative Strength Index were also below 50. Delving into the oversold territory, the latter indicator was 38.16 at press time. The market capitalization of the Ether token was at $150 billion at press time. The value represents a drop of more than 50% from the previous year's record high of $438.13 billion. Meanwhile, its price has dropped by 12% over the past 24 hours to $1,073.57.

What the Ethereum Merge Could Mean to a Potential Crypto Bullrun

The completion of the merger between the two major cryptocurrencies could cause a significant change in the price of Ethereum. Miners will no longer be able to operate, which could cause them to stop validating transactions. For operators of nodes actively running software on the Ethereum 2.0 network, the estimated annual return on their 32 ETH deposits is between 6% and 7%. It is not enough for some miners.

The upcoming upgrade to the Ethereum blockchain is expected to decrease the supply of new ETH. It could increase interest in cryptocurrency as more people are ready to stake it. According to Christine Kim, a research analyst at Galaxy Digital, the decrease in supply is a positive for investors as it shows that the blockchain is a haven asset.

ETH Staking

Investors are eager to see the merger of the two platforms happen. Reportedly, there is over $31.5 billion worth of Ethereum in the new staking mechanism, which is ready to validate recent transactions once the green light is given.

Many believe that investors will sell Ethereum's hard fork assets to the markets once the merger is completed. However, this is not likely to happen due to the various factors involved in the transaction. These include securing the network and ensuring that the consensus is strong. Another reason this is unlikely to happen is that developers will release the ETH in phases, which means that it will not immediately flood into the markets.

ETH Supply

According to a report by Glassnode, the amount of ETH staked in the Beacon chain smart contract during the first six months of this year has reached almost 12 million. There were also 398,000 unique validators. Meanwhile, the amount of ETH currently in the circulating supply is around 10%. The value of these assets is about $23.3 billion.

Other sources claim that the amount of ETH in the supply is higher, such as the Ethereum Launchpad. It shows that over 13 million ETH is staked, around 11% of the total supply. This increase in the number of assets being validated is a vote of confidence in the ecosystem despite the current bear market.

Effect on the Crypto Market

According to market research firm Messari, the crypto industry will likely split into different segments by 2022. It projects that various segments of the industry will continue to gain popularity. Despite the various predictions about the upcoming merger between Bitcoin and Ethereum, the two are still not on the same page. According to market analyst Noelle Acheson, more funds will flock to the decentralized digital currency after the deal.

Ether Price Predictions for 2022

Let's look at the various predictions for the rest of 2022. In addition, bear in mind that price forecasts for cryptocurrencies are often wrong. They can also change at any time. Also, the algorithm used to make these predictions is not always reliable.

According to TradingBeasts, the price of Ethereum will increase to $1,856 in August before it starts to drift back down again. It projects that the coin will reach $1,808.54 by the end of the year. Despite being more positive in the short term, DigitalcoinPrice is still cautious about the year's outlook. It projects that the bitcoin price will be around $2,541.50 in June, but it will fall to about $2,300 in July.

According to LongForecast, it is a bit bearish on the outlook for the price of Ether in 2022. It projects that the cryptocurrency will fall to around $1,612 in September before recovering to about $1,234 in November. It then predicts that the price will fall once more to about $1,037.

These various predictions for the next couple of years seem to be too pessimistic for a post-merger ETH. It's also possible that the price will not be able to go higher.

Should You Change Your Investment Strategy?

While it's not necessary to rush into any investment, it's essential to keep in mind that cryptocurrencies experience high price volatilities. Moreover, there are other factors that could affect the market such as the increasing number of regulations and the development of new technologies.

Although it's tempting to get into crypto, financial experts advise you to keep only 5% of your portfolio in virtual currencies. They also suggest you pay off debts and put aside an emergency fund. Even though it's a promising asset class, experts say that investors should avoid investing more than they can afford to lose.

Despite the various factors that could affect its price, Ethereum is still considered a safe bet. Even before the proposed merger between Bitcoin and Ethereum takes place, analysts believe its return to all-time highs could be possible. Thus, the Ethereum merge could indeed kick off a crypto bullrun.