Ethereum

This is Why Traders Can Expect ETH Price To Crash With the Ethereum Merger on Horizon

Written by: Elena R

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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Jun 9, 2022

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The Ropsten Merge is a crucial step that must be taken before making Ethereum’s transition to the Consensus Layer- also known as ETH 2.0- this August. For instance, it gives developers the review of how things will look in the future, after its complete transition to a less energy-intensive PoS algorithm mechanism. The successful transition of Ethereum from PoW to PoS would board well for Ethereum’s own transition. 

Ethereum’s merge is simply defined as a transition of the network’s current system of proof-of-work (PoW) to proof-of-stake (PoS), which further means that once Ethereum completes its merger, the transition will all go to stakeholders instead of miners. 

The newly transformed form of Ethereum PoS uses much less energy compared to the PoW.  Korpi 87, a DeFi Educator, has given a complete analysis of Ethereum Merge repercussions, and its effects on the structure of demand and supply. 

Korpi’s Analysis on Ethereum’s Merger 

Korpi’s analysis further reveals that after the successful completion of the merge, the entire dynamics of supply and demand would turn the daily sell pressure of ETH. Currently, it is $19 Million with the buying pressure of $8.5 million- which would flip to an $8.2 million buy pressure daily. 

Korpi explains that: 

“Currently 14,790 new ETH is issued daily to miners and stakers on the PoW and the PoS chain. At the Merge block, both chains merge and the PoS system begins. This number drops to just 1590 ETH as only stakers get rewarded for producing blocks.” 

Korpi, in his Twitter thread, adds an explanation of supply which is ‘simply selling pressure from Miners and Stakers, whereas they get new Issuance and sell some consistently’. He explains in addition to this that demand is ‘simply fee revenue burned’.

Quoting: 

“He assumes that miners sell 80% and they are not looking to accumulate crypto but to generate profit from operations, cost of mining is also high, on the other hand, stakers sell just 105 and don’t have many expenses to cover, all they want to do is accumulate.” 

Korpi further clarifies that after the completion of Ethereum’s Merge, there is going to be a new requirement of $10 million of new money every day to maintain the flat price. $8 million of existing holders would have to sell their ETH to prevent the price from going up. 

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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