Why Ethereum Price Is Unlikely To Dump After “The Merge”


Ethereum price rises above critical levels as “consolidation” looms, bullish momentum may receive a fresh boost and finally take ETH north of $2000. Meanwhile, market participants are speculating about the near future of the second cryptocurrency by market capitalization.

At the time of writing, Ethereum is trading at $1,710 with a 4% loss in the last 24 hours and a 9% gain from last week. After weeks of market leadership, ETH has underperformed Bitcoin. The number one cryptocurrency recorded an 11% increase in 7 days.

To dig deeper into the bitcoin price and its potential bullish signals, check out the video below where our Managing Editor Tony Spilotro explains the case of a bottom formation with massive potential for appreciation, similar to the year 2020.

Who is most likely to sell after the “merger”?

The market appears to be split over a “consolidation,” the event that will complete ETH’s transition to Proof of Stake (PoS) consensus. Some expect the Ethereum price to run under the heading “Buy the rumor, sell the news event,” while others are betting that the rally will continue.

In a recent report by on-chain analytics firm Nansen, which looks at the top ETH makers ahead of “The Merge,” staking dynamics and its impact on the price of Ethereum, there are speculations about a possible negative impact on the cryptocurrency from stakers.

Nansen rules out any short-term bearish impact from these investors as ETH currently locked on the Beacon Chain, the PoS blockchain, will be illiquid for a portion of them until the implementation of the Shanghai upgrade in 2023. This update will allow underwriters to withdraw their funds.

The illiquid ones are those who send their ETH to the Beacon Chain in 2020, and cannot withdraw their funds for an indefinite period of time, and the liquid ones are those who use Lido and similar solutions to share their funds and get rewards.

Among this group, Nansen believes that illiquid holders are unlikely to sell after the Shanghai upgrade in 2023 if the price remains above $600. There is about 1 million ETH locked in at this price which could be “dripping not the market”.

In this sense, the report claims that around 71% of the total ETH used to secure the PoS blockchain has been lost. Nansen claims that “18% of all ETH that is currently tethered belongs to illiquid equity holders who are winning, a class that is most likely to sell once they can get rid of it.”

However, Nansen does not expect this sale to negatively affect the price of Ethereum or put huge pressure to sell in the crypto market. This factor could act as another bullish fundamental for the Ethereum price after the “merger”.

Ethereum price ETH ETHUSDT
ETH price with slight profits on the 4 hour chart. source: ETHUSDT TradingView

Whales pile up in 2022

In addition to a possible long-term negative impact on the price of Ethereum, Nansen observed an increase in the number of ETH millionaires and billionaires. These addresses are categorized by the on-chain analytics company as individuals and not as smart contracts or exchanges.

The report claims that these large players have been “consistently accumulating Ethereum since the beginning of this year,” despite the bearish price action. As shown in the image below, the trend continued and rose in August and September of this year.

Nansen Ethereum ETH ETHUSDT price
Whales accumulate ETH in 2022. Source: Nansen

Will the accumulation of Tris positively affect the market, or will these whales pile up to get rid of ETH soon after the “merger”?



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