The price of Ethereum (ETH) has jumped over 50 per cent in the last seven days, even though crypto markets are currently facing extreme volatility due to intense selling pressure in the face of surging consumer price inflation. Crypto experts say this follows the developers announcing a tentative date for its massive software update, Ethereum Mergem which is slated for September 19.
In the last 24 hours, ETH’s price has risen by 5 per cent to cross $15,000. Moreover, its trading volume has increased by over 18 per cent in the last 24 hours, according to Coinmarketcap.com.
So, is it only the Ethereum Merge that has spurred Ethereum, or are there other reasons as well?
The Role Of Ethereum Merge
For the last few months, Ethereum enthusiasts have been waiting for its largest technical leap, The Merge. With its developers now announcing the exact timeline, it is witnessing an expected buzz. “The proposed merge is expected to make Ethereum network far more efficient and secure and should help in further value generation and wider reach,” says Prashant Kumar, founder of weTrade, a crypto platform.
Dr Oriol Caudevilla, board director at the Global Impact FinTech Forum (GIFT), and fintech advisor, says, “This (Ethereum Merge) will change how transactions on Ethereum are ordered, making it more efficient and sustainable for widespread use, since the network will transition from proof-of-work to proof-of-stake and a broader market retreat from risky assets.”
Recently, data shared by Glassnode, a Blockchain data company, revealed that a total of 13 million ETH, or 10.9 per cent of the total supply, has been put in the 2.0 contract (Ethereum Merge). Lido controlled 4.13 million ETH of this or more than 31.8 per cent of the entire investment, and Coinbase, Kraken, and Binance held nearly 3.5 million ETH together, or about 27 per cent of the total position, according to various media reports.
Other Reasons Behind Ethereum’s Leap
Sathvik Vishwanath, co-founder, and CEO, Unocoin, a crypto exchange, said that during the bearish cycle in the past few weeks, ETH lost more than other coins and tokens. Some of those losses are getting recouped.
One of the bigger challenges for ETH is the hefty fee for doing transactions on the blockchain. “Given the fee is extremely low for two weeks as the number of transactions on this chain was less, the sentiment towards the ETH coin has turned bullish, and we have seen as much as 40 per cent price increase from its rock bottom,” says Vishwanath.
Additionally, the last week or so has been fairly positive for crypto assets, with other currencies like Matic also witnessing a sharp upturn. The trend has smoothened investor nerves, which in turn has helped Ethereum and other coins. The global crypto market capitalisation was back above $1 trillion this week.
However, there are concerns that the rebound has not been accompanied by a discernible increase in trading volumes, and prices could perhaps fall once more, according to some crypto experts.