Ether price is outperforming the broader crypto market as the long-awaited Ethereum merger approachesbut the overall picture remains largely bearish.
Ether (ETH) has gained 48% in the last seven days, surpassing its big brother bitcoin (BTC), which has only gained 19% in the same period. It is also up 66% from its market cycle bottom of $918 on June 19, reaching its current price of $1,549.
However, the current ETH rally could be a bull trap as macroeconomic clouds darken. A bull trap is a signal that a downtrend in a crypto asset has reversed and is headed higher when in fact it will continue lower.
The main driver of the asset’s recent momentum has been linked to announcements regarding its final switch to proof-of-stake (PoS), which has been scheduled for September 19..
The merger will reduce grid power consumption by more than 99%. However, it will not necessarily reduce transaction fees significantly, as this will occur when scaling through sharding occurs.which is expected to happen sometime next year.
On Tuesday, a Coinbase report on the merger explained that the next major step and the last dress rehearsal is the Goerli testnet merger, which has been planned for August 11.
Goerli is the most tested Ethereum environment, with the highest user activity and the closest simulation to reality.
Is This Me who is Thinking that Ethereum will start the BULL RUN with its Merge ??#eth #Ethereum #ethereum2 #ethereum #bullish #bullish pic.twitter.com/oSHDKTz6vw
— Crypto Diamond (@ImCryptoDimond) July 19, 2022
I am the one who is thinking that Ethereum will start the bullish momentum with its Meltdown. #eth #Ethereum2 #ethereum #Bullish #bullish pic.twitter.com/oSHDKTz6vw
While the major upgrade is the fundamental driver of the current ETH market sentiment, the asset is still trading 68% below its November 2021 all-time high.
There have also been concerns that a significant amount of ETH could flood the market after the Merger. and your release of your staking smart contracts.
Nevertheless, 21Shares research director Eliézer Ndinga told Cointelegraph that this is unlikely to happen:
“Ether withdrawals will not occur until 6-12 months after the Merger, following the Shanghai update. Withdrawals will be limited to six validators each epoch or ~6 minutes to avoid bank runs and keep the network secure.”
According to a recent Finder poll, conducted before the most recent rally, said that There is still a lot of negative sentiment regarding Ether prices in the short term.
The panel of 54 industry experts surveyed thought that ETH would be worth $1,711 by the end of 2022, rising to $5,739 in 2025, before hitting $14,412 in 2030.. However, they also thought it would crash to $675 before the year was out.
Finder said there are a couple of macroeconomic factors that could cause this pullback.. The US Federal Reserve is expected to raise rates by 75 basis points again during its meeting on July 26-27, which is usually bearish for crypto markets. If the price of bitcoin (BTC) falls, the price of Ether will surely follow.
Additionally, the US Bureau of Economic Analysis (BEA) will release its advance estimate of second-quarter GDP growth on July 28. Another negative quarter, which is expected, will mean the country is in a technical recession, which is also very bad for risky assets like Ether..
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.