The second-largest cryptocurrency by market capitalization, Ethereum, has soared 45% over the past week, outperforming the majority of other betable assets. There could be a simple explanation for this:
As the Ethereum developer team nears the conclusion of an extremely difficult multi-year upgrade, traders are turning positive.
The second-largest cryptocurrency by market capitalization, Ethereum, has jumped around 45% over the past week, outperforming the majority of the top 100 crypto assets. Although there are many theories surrounding ETH’s uptrend, one of the main drivers of price movements is the impending Ethereum merger.
ETH trading has turned from bearish to bullish as the developers near the end of an extremely difficult multi-year upgrade. The total supply of ETH in profit has now risen to 56% with the intense social expectation of the merger, from a low of 41% just before the current price surge.
ETH/USD is trading in further bullish momentum.
According to statistics from Glassnode, a large clearing of short positions in the futures market was the reason for Ethereum’s 22% gain this week.
glass knot tweeted:
“Over $98 million in short futures positions were liquidated in one hour, pushing ETH prices up 12.5%.”
The number of losing ETH addresses (7d MA) hit a one-month low of 39,112,029 at press time, further demonstrating ETH’s recent uptrend.
Since the final actions that will actually transfer Ethereum activity to the Beacon Chain are scheduled for September, there is still plenty of time for The Merge. Superphiz.eth, an Ethereum educator, added in a Tweet that Goerli will undergo the merger transfer as the last public testnet around August 11.
The mainnet merge should float during the week of September 19 if all goes according to plan with Goerli.
Youwei Yang, director of financial analysis at StoneX, says that two “certainties” are behind this rise of Ethereum. The first is the recently announced time for Ethereum’s “fusion” update, which should make the network significantly more energy efficient. Yang claims that the “calm” of macroeconomic anxieties is the second.
“Actually, if you see the tick-by-tick price movement, this time it’s more like ETH leading BTC [or Bitcoin] instead of the usual reverse, so this is a strong indication of ETH-led bear market rally with ETH2.0 confirmation and sentiment,” Yang said, referring to Ethereum after the merger.
In his latest episode of “The Breakdown,” famed podcaster and dedicated industry watcher Nathaniel Whittemore made that claim. There is growing understanding that “the merger” could influence markets on Twitter, Discord, and everywhere else people are debating cryptocurrencies.
After months of low prices, the event suggests, as Whittemore put it, a “return of optimism” in cryptocurrency markets. The merger also fills a “narrative void”, allowing crypto enthusiasts to tell others stories about how this technology is changing the world.
Others believe that the merger could drive up the price of ETH for structural reasons. The upgrade represents a fundamental change in the potential applications of Ethereum by rewarding investors who invest their assets in the network. Even bitcoin-like deflationary forces that benefit holders more could result from this move. People buying ETH currently in the pipeline may view it more as an investment than a transaction in this scenario.
Related Reading | Liquidations top $230 million as Ethereum barrels top $1,400
Featured image from The Shutterstock, chart from TradingView.com