With the crypto community counting down the hours to the Ethereum (ETH) Merge upgrade, the focus is now on how the asset and general digital currency sector will respond to the transition to the Proof-of-Stake (PoS) protocol and how Ethereum’s price will react and if the migration will be smooth.
In this case, Marcus Sotiriou, an analyst at digital asset broker firm GlobalBlock acknowledged that the Merge presents several risks that might stand out during the initial stages of the upgrade, he said in a note shared with Finbold on September 12.
According to Sotiriou, after the transition, some of the notable challenges likely to emerge will be the inability of users to process the new chain since the software will still be new.
“Also, some of the APIs could break in ways which many people cannot predict. Furthermore, there could be another delay which would frustrate investors who have been waiting years for this transition to occur,” he said.
Notably, a section of the crypto community has maintained that for the Merge’s impact to be felt, the September 15 event must be successful.
Impact of the Merge on the general market
At the same time, the analyst acknowledged that the Merge is a complex technical event that will affect Ethereum and the general cryptocurrency sector. However, he pointed out that the long-term benefits outweigh the short-term concerns.
Sotiriou also suggested that by alleviating the environmental concern, the Merge will open the door for institutional capital inflow in the second-ranked cryptocurrency by market capitalization.
The projection is also backed by mainstream players, including the Bank of America (NYSE: BAC), which believes the Merge will likely lead to institutional adoption that’s known to drive prices higher.
With uncertainty regarding how the Merge will turn out, some investors are betting on the asset’s price, considering that the blockchain upgrade is viewed as bullish for Ethereum as the fear of missing (FOMO) sets in.
This notion is backed by Santiment, that notes that searches related to the event have surged recently, with investors expecting volatility in the asset.
Growing interest in Ethereum
Similarly, the crypto trading platform BuyUcoin, has also recorded an uptick in Ethereum-related transactions.
“Since the countdown to the merge of the largest smart contract Blockchain in the world began, we have witnessed an impressive surge in the Ether trading on our platform, which is mainly due to massive euphoria around the merge as investors are perceiving the migration to proof of stake model very positively,” Shivam Thakral BuyUcoin CEO told Finbold.
Overall, the Merge forms part of a big week ahead, as acknowledged by crypto trading expert Michaël van de Poppe in a tweet on September 12.
“ETH merge is approaching, which is one of the biggest events in blockchain in the past years,” Poppe said.
According to Poppe, crypto investors should also look out for the upcoming inflation data release alongside the likely climax of the U.S. dollar index.
Ethereum’s price after the Merge
Overall, several market analysts have fronted different possible scenarios on price movements for Ethereum after the Merge. As reported by Finbold, a popular crypto trader warned that Ethereum might undergo a pump and dump situation, especially with the distribution of tokens from the old Proof-of-Work (PoW) protocol.
Interestingly, CEO of FTX crypto exchange Sam Bankman-Fried has also projected rockiness around the initial stages of the Merge. According to Bankman-Fried:
“I do think that it’s going to be – as all big transitions are – a little bit rocky at the beginning. I think there’s going to be some messy activity around when it happens. I think that’s sort of inevitable, both long term and probably even medium term.”
Elsewhere, as per a Finbold report, Antoni Trenchev, the co-founder of crypto lending platform Nexo, also stated that investors should not expect an automatic rally in Ethereum since the Merge’s initial success will impact the price movement.
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