Ethereum has completed one of its most important milestones with the successful completion of its “merger,” the transition to Proof of Stake (PoS) consensus. Market participants were expecting violent price action during this event, but the results could be disappointing.
And we’re done!
We wish you all included. This is a huge moment for the Ethereum ecosystem. Everyone who helped make the merge should feel proud today.
– Vitalik.eth (@VitalikButerin) September 15, 2022
At the time of writing, Ethereum (ETH) is trading at $1,480 with a loss of 7% and 8% in the last 24 hours and 7 days, respectively. The second cryptocurrency failed to consolidate the rally in the area it lost earlier, instead the price action appears to be heading to the downside on lower time frames.
Why hasn’t the merger happened for Ethereum
Ethereum managed to get close to the $1800 price tag but was rejected from those levels due to two crucial macro-economic events. QCP Capital trading company registered Lack of market activity in the days prior to the “merger”.
In this sense, the event has gone from acting as a potential price catalyst to any direction into a “fatal volatility factor”. The company believes that the most uncertain after the move to PoS is the ETH fork and miners trying to claim a slice of the crypto market share.
However, the ETH fork was a “disappointment” as the backers failed to convince the market of their future and the potential to replace ETH PoS. QCP Capital noted:
mkt finally came to the ETHW agreement as a potential big disappointment last week, after the release of the “completely” white paper (9 pages of “this page is intentionally blank”). Combined with the chain identifier disaster, which means that no one will actually be able to test the chain before the fork.
However, the market may experience some volatility as major players cancel their “merging” positions. QCP Capital concluded:
In the longer term, ETH POS should be bullish, but we don’t expect an immediate breakout move after the consolidation. We anticipate massive pressures on ETH volumes after the merger.
The slowdown in inflation may nearly support this, QCP Capital believes that the upward trajectory of this metric has “peaked and is heading downward”. This could provide support for cryptocurrencies and other risky assets to bounce back from their current levels.
The market is pricing in the Fed which may act as a bullish factor if the institution signals less aggressive monetary policy. At the time of writing, market participants were expecting the Federal Reserve to raise interest rates by 75 to 100 basis points.
In the coming months, as the downward trend in inflation continues, the Fed may finally turn around and the cryptocurrency market may rise. Ethereum appears poised to benefit from a shift in macro dynamics with a successful “merger”.