The Merge has been the major topic for Ethereum on several occasions but not a satisfying one. The reason is that the event had to be postponed several times and that a lot of testing had to be done and some of it is still unfinished business. Therefore, every announcement should be taken with a grain of salt given the track record of possible launch dates that have been missed.
This time it’s different, or is it? It seems that the hype train has started and Ethereum is rallying.
The Merge has been postponed
Originally the merge was about to happen in June but the development and the testing weren’t satisfying at this time so the event was postponed. During the merge, the Ethereum blockchain will switch its consensus from mining-based proof of work to proof of stake. Since the proof of stake blockchain is a separate one it has to be connected to the old chain, hence the name merge.
The event is supposed to be the most important for Ethereum in years. While it’s not the final development stage of Ethereum 2.0 it marks the beginning of a new era. Developer Tim Beiko confirmed that the launch could happen as early as mid-September which aligns with the original plan to start on September 19th.
It is important to understand that this timeline is subject to change and it seems that the market is once again going wild without confirmation. This might be an explanation for a divergence between ETH and BTC.
Bitcoin is lagging behind and Ethereum is leading the charge
Usually, Bitcoin is the most dominant and most relevant cryptocurrency in the market. If BTC moves the rest of the market moves. That being said, the market outlook for Bitcoin is more important for all other crypto assets than everything else.
It seems that this time is different because Ethereum is rallying hard and already managed a clean breakout while one could argue that Bitcoin is technically still stuck at the top of its range. A clear breakout above $23.000 would confirm that BTC is indeed following through.
Should this clean breakout not happen and Ethereum continues its current rally this summer could become indeed interesting. It is not necessarily a bad thing if Ethereum should decouple from Bitcoins price movements but it would also change the way we have to look at the market. One thing is for sure, should the merge be postponed again and Bitcoin should be still lagging behind, the market could face a serious struggle. On the other hand, if everything is going according to plan Ethereum could possibly drag the rest of the market to new yearly highs.
Inflation and the Fed remain a risk
One should also keep in mind that external factors have been driving the crypto market much more since December 2021. Inflation is a problem and so far, central banks haven’t found a cure for it. Many analysts have pointed out that the only way to tackle this problem is by increasing interest rates and destroying overall demand.
A recession is becoming more likely. It remains to be seen if the crypto market can overcome such a crisis if this should be in fact the case.
In conclusion, the situation is bullish for crypto. But then again only cautiously bullish.