Ether and The Merge: What’s next for ETH?

What’s next for ETH if and when the much-anticipated Merge happens?

With the news that one of the Ethereum testnets is undergoing work to allow it to run a proof-of-stake consensus mechanism, some crypto enthusiasts are getting very interested in what happens next to ether, the second biggest crypto.

Let’s take a look at what is going on, and explore what some people think might happen. 

Changing Ethereum

While Ethereum has been using the proof-of-work (PoW) consensus mechanism since it came out in 2015, there have been some concerns with PoW as a way to add blocks to the blockchain. For instance, with Ethereum being associated with a number of decentralised applications (DApps) and other blockchain-based ecosystems, the way in which proof-of-work operates means that, basically, the system slows down more and more as more people use it.

Furthermore, there are concerns about the environmental impact of proof-of-work. With computers being used to crack increasingly complex mathematical equations, there is a worry that cryptocurrency is bad for our planet. What proof-of-stake (PoS) does is not only remove those energy-intensive computers from the process but also, at least in theory, makes transactions quicker and, in turn, cheaper too.

If and when Ethereum does convert to PoS, then that would make it the largest blockchain to use that consensus method and, crucially, it would make ETH the largest cryptocurrency to use proof-of-stake. While plans for the new form have been in the pipeline for some time, things started to heat up in late May 2022. This is when the people behind the blockchain announced that one of the system’s testnets – that is, a separate, experimental blockchain used to test new technology – called Ropsten was due to undergo the transformation from proof-of-work to proof-of-stake. While no exact time for the switch has been announced, it is due to be completed by some point on 9 June. 

This is important because Ropsten is the oldest testnet that Ethereum has. If it works, then we can assume that other testnets will be able to start using proof-of-stake. The way that they will do this is the way in which Ropsten should do this and, in time, the main Ethereum blockchain will do it. That is, it will be merged with something called the Beacon Chain. This chain, which went live in 2021, is designed to run parallel to the main blockchain. However, at some point – probably in 2023 – the two will merge, which will mean that, finally, Ethereum will be powered by and secured by a proof-of-stake consensus mechanism.  

As the blockchain’s website says: “Imagine Ethereum is a spaceship that isn’t quite ready for an interstellar voyage. With the Beacon Chain the community has built a new engine and a hardened hull. When it’s time, the current ship will dock with this new system, merging into one ship, ready to put in some serious light years and take on the universe.”

Will ether undergo a boost following the Merge? – Photo: Shutterstock

So that is what is supposed to be happening. But what sort of impact has this had on ETH? After all, if the often-hyped “flippening” – the moment when ether overtakes bitcoin as the largest and most important cryptocurrency – is to happen, then anything that brings proof-of-stake to potential investors should be a good thing.

This process, called The Merge, could be complete very soon, although further improvements to the system, such as allowing for greater throughput as more people use the blockchain, are earmarked over the next year or so. Anyway, let’s take a look at the last few weeks of the ETH price history and see what we can find out.

Ether in May and June

At the start of May, ETH was worth $2,729.99. It was on an upward trajectory and reached a high of $2,956.69 on 4 May. However, what was a slow slide downwards soon turned into a crash.

The UST stablecoin became depegged, causing the associated LUNA cryptocurrency to collapse, sending the crypto market into turmoil. On 12 May 2022, ETH fell to a low of $1,748.30. While the coin recovered slightly, and even spent a little time on 15 May just above $2,000, it went back down again to a new monthly low of $1,721.26 on 27 May.

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When the news about the potential of The Merge being possibly imminent appeared on 3 June, the market appeared to shrug its shoulders. While it opened at $1,834.14 and reached an intraday high of $1,840.06 that same day, it closed at $1,775.08. Since then, though, there has been some good news, with it consistently trading at a little above $1,800.

On 8 June, as The Merge on the testnet was taking place, the coin was worth around $1,815 as of 15:15 BST (UTC +1). It is worth pointing out, though, that the possibly less than overwhelming response to the news of the work may well have been down to a combination of factors.

First, the market has been in something of a slump in 2022, with the bearishness exacerbated by the collapse of the Terra ecosystem. Second, this is not the first time that Ethereum has carried out changes. Therefore, people may well be waiting and seeing if the Merge is successful and how the newer system will work before they start taking an interest in the platform.

Ether price predictions for 2022

Now, let’s take a look at the ether price predictions for the rest of 2022. As ever, we need to remind you that price forecasts, especially for something as volatile as crypto, can very often be wrong. Also, you should know that crypto price forecasts are made using an algorithm, which means they can change at any time.

First, TradingBeasts is slightly downbeat in its ETH price prediction for 2022. It says that the coin will move upwards and reach $1,856.13 in August, but then it will slowly drift back down to reach just under $1,808.54 at the end of the year. 

Next, Gov Capital is a bit more bullish in its forecast. The site states that ether should break back past $2,000 in early August and continue to grow, with a high for the rest of the year coming on 1 December, when it is forecast to be worth an average of $3,025.36. It should then drop back down somewhat, trading at around $2,792.32 on 31 December.

Meanwhile, DigitalCoinPrice is more optimistic in the shorter term, but cautious as the year goes on. It says that the coin should be worth around $2,541.50 in June, but should then dip to $2,403.48 in July. By the end of the year, ether should be worth about $2,403.48.

Finally, LongForecast is rather bearish when it comes to an ether price prediction for 2022. The site says that it should fall down to $1,612 this month and continue dropping, reaching $1,011 in September. There should be a recovery to $1,234 in November, but then it should fall once more to close the year at around $1,037.

In short, the forecasts do not seem to be too enthusiastic for a post-Merge ETH, so perhaps the flippening will not be happening at any time soon. Ether enthusiasts can, however, take comfort in the knowledge that forecasts are very often wrong. However, if you do want to invest in ETH, then you will need to do your own research, remember prices can go down as well as up, and never invest more money than you can afford to lose. 

Further reading

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