The integration of Ethereum is one of the most significant events since the emergence of blockchain and the industry. The event moves the block chain from proof of work (POW) to proof of proof (POS). While everyone is waiting for the positive effects of the merger.
The effect of the transition is already reverberating in the crypto market. The market has seen a significant decline in the price of Ethereum in the last 48 hours. Moreover, crypto market analysts fear that there may be a further decrease in the price of Ethereum after the merger.
Although everyone expects good results, there is still a possibility that a hard fork may occur. If this happens, it will have a negative impact on crypto prices.
Buy merger hype, sell news status
Ether has already outperformed BTC, courtesy of compounding. However, some experts fear that the merger rumors may have a ‘buy the rumor and sell the news effect’.
Buy the news and sell the news event in the major markets. When high expectations of merger events or economic reports cause an increase in asset prices. The increased values will drop again after the event has passed.
Popular Cryptocurrency trader and influencer Lark Davis has expressed his thoughts on the buzz. In it Twitter, said that the merger is basically a violent phenomenon. Davis listed the features expected from the upcoming Ethereum POS. However, he also stated that they will not have a significant impact immediately.
Following Davies’ analysis, the impact of increased energy efficiency, emissions and all of its features will only be reflected in the long term. So, he thinks the Ethereum merger has a ‘selling news effect’.
Another major crypto influencer, Quinten Francis, commented on the merger. According to Francis, the price of post-merger Ethereum will drop in contrast to the price of Bitcoin.
So, this implies that while the price of Bitcoin will rise, the price of Ethereum will fall after the merger. He added that the price of Ethereum will recover strongly after some time.
Ethereum integration does not solve other fundamental problems.
Experts explain why the results of the Ethereum merger are not implemented quickly. The transition transforms blockchain’s consensus mechanism into POS, but doesn’t solve other fundamental problems. For example, it does not address the issue of lower gas bills or expand the capacity of the network.
It also does not improve transaction speed. A smooth upgrade will not solve the problem of high transaction fees.
Aloe CEO Howard Wu expressed his concern on LinkedIn about the high gas charges in Layer-2s. He said they can only succeed if bandwidth is enabled by Ethereum.
But Buterin’s four-step theory can address these issues. Its data sharing, performance and scalability solutions solve all problems.
Featured image from Pexels, chart from TradingView.com