The most important aspect of the ETH 2.0 upgrade is the Ethereum integration, as it will shift from Proof of Work to Proof of Stake.
Moving from Proof of Work to Proof of Stake consensus is the focus of promotion. The improvement, as previously reported, has been delayed until the end of 2022, with no specific deadline in sight.
The world’s second largest cryptocurrency was supposed to be weeks away from “consolidation,” a June upgrade of the Ethereum blockchain that should make it faster, cheaper and less energy-intensive, promising a clearer and cleaner crypto future.
Ethereum ETH integration will help
Tom Dunleavy, Senior Research Analyst at Massari, believes in a report titled “Thesis Chapter” The Ethereum merger is likely to be a major turning point in the economic outlook for investors.
He notes that in the past, the leaders of the crypto market, Bitcoin and Ethereum, had a significant positive correlation with the broader US stock market. For longer periods, the correlation between the two cryptocurrencies and the Nasdaq and S&P 500 index was 40-50 percent, while for shorter periods it was around 90 percent.
Related reading | Top 5 valuable NFT kits and a tool to keep track of
On the other hand, gold and US government bonds have historically had a negative correlation with stocks. However, this negative correlation is weakening for the time being. During a market slump in 2020, both gold and bonds, as well as stocks, fell.
ETH/USD trades at $2,821. Source: TradingView
“It is certainly plausible that the prospective Ethereum upgrade to Proof of Stake could be delayed again given that this transition is very complex and it remains uncertain whether it can deliver on its promise to reduce costs and increase transaction speeds.”
On April 11, Ethereum fell 8% from $3,215 to $2,947, the day Ethereum lead developer Tim Beiko announced on Twitter that the June deployment had been delayed as testing continued. This month, it is down 13% to $2,844.
After the merger, ETH will act as a quasi-government bond. Speculators will put up cash for a fixed rate of return, similar to the bond principle. This will also solidify Bitcoin’s position as a form of digital gold.
Consolidation may drive volatility forward
Messari has predicted that the broader crypto industry will detach from global markets by 2022. Various segments of the crypto business will continue to gain traction, according to the market research firm.
Meanwhile, expectations remain that the merger will push Ethereum over Bitcoin. After the merger, more money will flow into Ethereum, Noelle Acheson, head of market analysis at Genesis Trading, told Reuters.
ETH is currently trading at around $2,850, with a market capitalization of $343.98 billion, while Bitcoin is currently trading at around $38,200, with a market capitalization of $726.69 billion.
Featured image from Getty Images, chart from TradingView.com