After a strong rally in the last 45 days since the beginning of July 2022, the crypto market has once again come under selling pressure. The broader crypto market has been retreating for the fourth consecutive day in a row, including the top two giants Bitcoin and Ethereum.
As of press time, Ether (ETH) is currently trading at 3.5% lower at a price of $1,850 and a market cap of $225 billion. Since the beginning of July, ETH gained almost 100% in its price before retracing since the start of this week.
The recent optimism in Ethereum comes on the backdrop of the long-awaited Merge upgrade. As per David Kroger, digital data scientist at Cowen Digital, institutional investors are already gearing up for the Merge. Speaking to Bloomberg, Kroger said:
“Institutions have been asking us about the Merge, along with the technicalities and probabilities associated with it for several months now”.
However, he adds that some players have been taking profits at the current levels. This could be the reason behind the recent price drop.
Is the Merge Euphoria Coming to an End?
Although the Ethereum community continues to show support for the Merge, some detractors have been working to fork the Ethereum blockchain. These are specifically the ETH miners who are willing to continue with the PoW version of Ethereum.
However, Ethereum co-founder Vitalik Buterin has completely opposed this move. He said that his team won’t be supporting the Ethereum PoW after the complete transition to the PoS model.
Market experts are carefully watching the developments. On the other hand, BitMEX CEO Arthur Hayes pointed out that if the Merge doesn’t succeed, traders will be on a short spree for ETH. He wrote:
If the merge is not successful, there will be a negatively reflexive relationship between the price and the amount of currency deflation. Therefore, in this scenario, I believe traders will either go short or choose not to own ETH.
But Hayes also explains the flipside that a successful Merge will take ETH price even higher. “If the merge is successful… traders will buy ETH today, knowing that the higher the price goes, the more the network will be used and the more deflationary it will become, driving the price higher, causing the network to be used more, and so on and so forth,” he explained.
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