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Ethereum Merge: There might be a price correction amid high volatility in ETH, experts say

Ethereum Merge: There might be a price correction amid high volatility in ETH, experts say

The Ethereum network is expected to shift from a proof-of-work to a proof-of-stake model by September 15, and the implications for such a change are many.

Ethereum Merge: There might be a price correction amid high volatility in ETH, experts say (Photo: Reuters) Ethereum Merge: There might be a price correction amid high volatility in ETH, experts say (Photo: Reuters)

The Ethereum network is expected to shift from a proof-of-work to a proof-of-stake model by September 15. What it means is that miners who used to solve complex mathematical calculations through super computers to add a block to the blockchain, which is also called proof of work,  will now become a validator where they will require 32 ETH to be staked before a user can become a validator, also known as proof of stake. 

What will be the impact of the Ethereum Merge? Vikram Subburaj, CEO, Giottus Crypto Platform, said, “The Merge is the transition of Ethereum (ETH) blockchain to the Proof-of-Stake (PoS) consensus mechanism. It is expected to reduce energy consumption on the network by 99 per cent and will also result in a 90 per cent net drop in annual issuance of ETH. While the Merge will change the consensus mechanism; it will not increase the capacity of the Ethereum network. The Merge may lead to forked chains similar to Ethereum Classic (ETC) that split from Ethereum in 2016.”

What impact will it have on prices? “In the shorter term, I don't foresee any upward moment because the news was already there.  What I expect is there might be a price correction if the proof of stake,  take two points down the line, and then we upgrade,” Subburaj said.

“In the short term, the Merge may lead to high volatility in ETH prices depending on the success and outcomes from it. Over the long term, though, this will make Ethereum a stronger crypto asset. For now, investors should only hold Ethereum on a wallet or exchange that supports the Merge and any new forks. All coins will be automatically transferred to the new blockchain while any new forked coins will also be issued to the investor. NFT holders are encouraged to hold their NFTs in private wallets,” Subburaj added. 

With Ethereum Merge around the corner, exchanges have also witnessed a surge in transactions. For example, BuyUcoin witnesses a 25-30 per cent jump in Ethereum trading on its platform. 

Shivam Thakral, CEO, BuyUcoin, said, “The most awaited event of the crypto industry in 2022 is the Ethereum merge which is expected to make the Ethereum network more energy efficient. As a part of the merge, the Ethereum network will migrate from miners-dominated proof of work to a more efficient proof of stake model. Since the countdown to the merge of the largest smart contract Blockchain in the world began, we have witnessed an impressive surge in the Ether trading on our platform which is mainly due to massive euphoria around the merge as investors are perceiving the migration to proof of stake model very positively. If we look at Ethereum classic, it has seen a similar kind of rally owing to the upcoming merge and the momentum will sustain post-merge as investors' sentiment around the crypto asset is looking extremely positive. The final merge will take place on September 15.”

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