Will Ethereum Merge hopium continue, or is it a bull trap?

While Ethereum is performing better than the wider cryptocurrency market as the Merge approach, the overall picture is still bearish.

Ethereum (ETH), which gained 48% in seven days, has outperformed its big brother Bitcoin (which has only managed 19% in the same time). It is currently trading at $1549, 66% higher than its June 19 market bottom of $918.

The current Ethereum rally may be a bull trap as macroeconomic conditions are darkening. A bull trap indicates that a declining trend for a crypto asset is now reversed and is headed upwards, when in fact it will continue downwards.

Recent momentum has been driven by announcements about the asset’s final proof-of-stake switch, which was scheduled for September 19.

The Merge will decrease the network’s energy consumption to more than 99 percent. It will not reduce transaction fees in any significant way, however. This will happen when scaling via sharding takes place. This is expected to occur sometime next year.

A Coinbase report on July 19 explained that the next big step and last dress rehearsal is the Goerli testnet Merge, which was planned for August 11.

Goerli, the most battle-tested Ethereum environment, has the highest user activity and a close simulation to the real thing.

Is this me who thinks that Ethereum will launch the BULL RUN together with his Merge? ?#eth #Ethereum #ethereum2 #ethereum #Bullish #bullish pic.twitter.com/oSHDKTz6vw
— July 19, 2022, Crypto Diamond (@ImCryptoDimond).

Despite the fact that the major upgrade is the main driver of Ethereum market sentiment at the moment, trading is still down 68% from the November 2021 high.

Concerns have been raised that a large amount of ETH could flood the market following the Merge and the release from the staking smart contract.

Cointelegraph was told by Eliezer Ndinga (21Shares director of research), that such a thing is unlikely.

“The withdrawals from Ether will not occur until 6-12 month after Merge after the Shanghai upgrade.” To avoid bank runs and protect the network, withdrawals of Ether will be limited to six validators per epoch. This is to ensure that there are no bank runs.

Related: Ethereum devs confirm The Merge’s perpetual date

A survey conducted by Finder before the rally sai shows that there is still a lot negative sentiment about short-term Ethereum prices.

54 industry experts polled believed that ETH would reach $1,711 at the end of 2022. It will then rise to $5,739 in 2025 before reaching $14,412 in 2030. They also predicted that it would drop to $675 by the end of the year.

According to Finder, there are two macroeconomic factors that could lead to this retreat. The U.S. Federal Reserve will likely raise rates by 75 basis points at their July 26-27 meeting. This is generally bearish news for crypto markets. Ethereum will follow Bitcoin’s lead if it falls.

The U.S. Bureau of Economic Analysis will also release an advance estimate of GDP growth for the second quarter on July 28. A negative quarter will also be expected. This is bad news for Ethereum and risk-on assets like it.


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