After the Merge, How Ethereum May Become More Popular Than Bitcoin?

The present market momentum is being driven primarily by Ethereum as it nears a big shift in consensus; however, might Ethereum eventually overtake Bitcoin?

Abstract:

• After the Merge, there may be no natural selling pressure if Ethereum’s issuance is altered.
• Policymakers and ESG-focused businesses will benefit from the network’s 99 percent reduction in energy consumption.
• As a turbulent week of macroeconomic events begins, ETH prices are down 2.4%.

While crypto markets have been on a tear over the previous two weeks, led by Ethereum’s growth, they have been falling during Monday morning’s Asian trading session.

On August 11, the Merge testing phase will begin, and on September 19, the mainnet will go live.

Due to the Merge, the new proof-of-shake chain will replace the current proof-of-work chain as Ethereum’s primary ledger. Staking, rather than mining, will become the network’s consensus mechanism.

Why this is such a positive development for Ethereum has been the subject of much discussion and analysis recently. Some even think it has the potential to “flip” Bitcoin and become the most valuable cryptocurrency in the market.

The Importance of the Merge

Vivek Raman, an Ethereum researcher and analyst, explained on July 24 why he anticipated ETH would dethrone BTC in a series of tweets.

Why ETH will flip BTC:

There are 900 BTC mined per day. At current prices, that’s ~$20mm to miners daily

Let’s assume miners sell 90% to cover costs. That’s ~$18mm in sell pressure *every single day*

Meaning, without ~$18mm of new daily buy pressure, BTC price goes down

(1/8)

— VivekVentures.eth 🦇🔊 (@VivekVentures) July 23, 2022

The initial argument relied on the fact that 900 BTC are mined every day. Because of this, Bitcoin is always subject to selling pressure from profit-seeking miners. He also noted that the price will decline in the absence of fresh demand.

It stands to reason that after the Merge is complete, Ethereum’s price will begin to rise on its own accord when the underlying supply and demand balances are restored.

Currently, 14,250 ETH are mined every day on Ethereum, however this rate is expected to drop after the Merge when the fee-burning mechanism is implemented in August 2021. This method has been used to destroy 13,249 ETH over the past week.

As a result, “there may be *net daily purchase pressure* on ETH (without a single dollar of external capital entering),” he explained.

One positive he left out was that following the Merge, Ethereum’s energy consumption would drop by more than 99 percent. By doing so, the network’s legitimacy will increase among green groups, government agencies, and businesses. As Bitcoin’s popularity grows and the number of miners increases, the amount of energy required to keep the network running will remain constant at proof-of-work.

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Current Ethereum Price

As of last Friday, the price of Ethereum had risen to $1,639, marking a 30 percent increase over the preceding two weeks. Over the previous week, it has created a range-bound channel, but has been unable to break out beyond its limiting price level.

The price of ether has fallen over the past day, trading at $1,518. Even with the current uptick, the asset is still down 69% from its all-time high in November 2021, suggesting that the upswing may be temporary.

With the Federal Reserve expected to raise interest rates again and second-quarter GDP statistics due to be released, macroeconomic news from the United States is likely to be a driving force this week.