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ETH Merge due in September not yet priced in, according to Vitalik Buterin

12 Aug, 2022
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The crypto community is eagerly awaiting the long-promised upgrade to Ethereum, in which the network is slated to transition from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism. Previously referred to as Ethereum 2.0, this upgrade is now known as The Merge.

Ethereum (ETH) was created as a more useful, versatile alternative to Bitcoin (BTC). So far, in its seven years of existence, it has held its position as the second-ranked cryptocurrency by market cap and proven its worth as the foundation of many crypto projects and innovations such as DeFi, smart contracts and NFTs. It's safe to say that major changes to Ethereum will have ripple effects across the entire crypto ecosystem. But Ethereum has also struggled with scalability issues and increasing fees on the network.

The Merge upgrade would eliminate the possibility of mining from the Ethereum blockchain. Instead, transaction validation would be carried out exclusively via staking. This would make Ethereum more energy efficient and scalable, a strong selling point for ETH as regulators around the world start pointing at crypto mining's carbon footprint. But it's also important to keep the Ethereum network affordable for ordinary users and institutions.

The Merge has been delayed multiple times, but Ethereum co-founder Vitalik Buterin has recently confirmed the launch date to be 19 September 2022. However, this date does not mark a complete transition to Proof-of-Stake across the entire Ethereum blockchain. There will be several more steps that need to happen. Rather, it's the goal date for a merger between the ETH mainnet and the PoS Beacon Chain.

ETH price and supply predictions before and after the Merge

With such a significant date coming up for Ethereum, crypto traders are preparing for the market to react. Some insight comes from Vitalik Buterin himself, who detailed his own expectations in a recent interview. The Ethereum co-founder opined that the Merge would not immediately bring about dramatic price changes to Ethereum after its launch, saying, "I think [The Merge is] not going to be priced in pretty much until after it happens". Buterin stated that it would take time for the market and the community to psychologically adjust to The Merge, during which there will be fluctuations in Ethereum's value. Interestingly, Buterin also noted that Ethereum would be 55% complete after September, so there are still many improvements to be made in the future.

Many analysts do expect a price rally for ETH just before the Merge goes live in September, but traders and investors should also be aware that a deployment like this is usually followed up with a cleanup phase of around 6-8 months, during which withdrawals for staked Ether are likely to be unavailable.

ETH supply is also expected to be drastically reduced by the Merge because of the adoption of the EIP-1559 proposal, which would burn a proportion of ETH used in transaction fees. This would improve transaction speeds on Ethereum and reduce inflation of ETH, even shifting it into deflationary territory.

Vitalik's recent announcements already seem to have spurred price speculation, with strong price performances from Ethereum, Ethereum Classic and Staked Ethereum since the news.

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