Ethereum Jumps 12% As The Merge Draws Nearer
Crypto Briefing | Jul 17, 2022 12:41AM ET
ETH is outperforming in the market this weekend after a 12% surge. It’s currently trading at around $1,355. The rally comes two days after Tim Beiko suggested a tentative Sept. 19 launch date for Ethereum’s long-awaited Merge to Proof-of-Stake. Ethereum is breaking out.
The number two crypto put in a 12% rally Saturday, briefly touching $1,363 for the first time in a month. It’s since posted a slight cool-off, currently trading at about $1,355.
The ETH rally has led to a bounce across the market, helping assets like Synthetix and Avalanche hit double-digit gains. Lido-staked ETH also jumped just about 12.6%, while LDO, the governance token for the Lido DAO, is up 22.8%. Interestingly, BTC gained around 3.2%, hinting that Ethereum is leading the current rally despite Bitcoin’s dominance over the market.
While the exact reason for the jump is unclear, improving sentiment surrounding Ethereum and its forthcoming “Merge” to Proof-of-Stake may be one factor. On Thursday, the Ethereum Foundation held its latest Consensus Layer Call , in which the Merge was discussed. Ethereum Foundation member Tim Beiko suggested a provisional launch date of Sept. 19, dropping the strongest hint that the Merge could be just a few weeks away.
Before the Merge can take place on mainnet, Ethereum is set to go through one final test run on the Goerli network in the next few weeks. The final launch will follow that, though Beiko has pointed out that the mid-September date is only tentative and could change.
The Merge update involves merging Ethereum’s execution layer and consensus layer to move the network away from Proof-of-Work and onto Proof-of-Stake. This is expected to reduce the network’s energy consumption by 99.95%, but the Merge has also widely been seen as a bullish catalyst for ETH set to reduce the network’s issuance by around 90%.
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In switching to Proof-of-Stake, the network will no longer pay miners and instead offer fees exclusively to validators. As Ethereum also burns a portion of its supply in gas fees via EIP-1559, it’s estimated that ETH could become a deflationary asset following the update. According to ultrasound. If the Merge ships on Sept. 19, the ETH supply will peak at 120.2 million and slowly deflate over time.
With the Merge narrative beginning to take hold following the latest Ethereum Foundation call, the market may be pricing in the impact of the update despite the months-long slump hitting ETH and other crypto assets this year.
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