With the Ethereum Merge completion, the crypto industry is witnessing a historic event. The much anticipated event represents the Ethereum network’s formal adoption of the Beacon Chain. As the new consensus layer to the current Mainnet execution layer, the beacon chain acts as a step to future upgrades. Overall, the Merge represents Ethereum’s transition to proof of stake mechanism.
The proof-of-stake model could allow the Ethereum network to reduce energy consumption by nearly 99%. This could be a huge development in the crypto industry’s pursuit of energy efficient processes.
Ethereum Price Momentum After Shift To Beacon Chain
After the price drop due to the CPI data release on Tuesday, ETH failed to recover in the last 24 hours. From trading at above $1,700, the cryptocurrency dropped to as low as under $1,600 level. Earlier on Wednesday, ETH went to a low of $1,565. As of writing, ETH is trading at $1,587.54, down 1.72% in the last 24 hours, according to price tracking platform CoinMarketCap.
Meanwhile, if ETH recovers strongly in the lead up to The Merge completion and reaches $1,675 level, it could mean bullish trends. According to price analysis from Bitcoinsensus, the bullish target for ETH to form a flag pattern is around $1,675. This could mean a potential rally in Ethereum in near term.
“Bllish target for this Ethereum flag pattern is the $1,675 price level. This is a potential surge of about 5%+ that we might see play out in the coming days.”
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Short Term Vs Long Term Price Action
On the other side, there is a possibility that the market could turn bearish due to the trends in Ethereum derivatives. As traders short derivatives, there are chances that the shift to beacon chain could turn Ethereum into a bearish asset for a brief time. In the long term, however, The Merge could play out as a massive signal for new institutional investors, thanks to the improved energy efficiency.
Ethereum cofounder Vitalik Buterin had already suggested that the real impact of The Merge could only be seen in long term. He said that it could take as long as six to eight months for the transition to affect ETH price. Meanwhile, Ethereum Classic, which runs on the proof of work model, saw a huge price surge in recent times. This is due to the probability of a massive influx of miners shifting to the ETC network. With ETH’s shift to the proof of stake consensus, miners on Ethereum network would be redundant.
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