Ethereum merger is 90% complete, optimistic sentiment promotes ETH price recovery

The news of the Ethereum merger has aroused optimism on the Internet. In the past seven days, the price of ETH has recovered, rising by more than 19% at one point, and the price has exceeded 1.6k US dollars. As the merger craze eased over the weekend, the price of Ethereum remained above 1,500 US dollars.

Ethereum co-founder Vitalik Buterin recently said that the team is working on five long-term phases to enhance the overall functionality of the network, and the long-awaited merge is the first thing on the schedule. V God said that the merge is 90% complete and only needs to be tested on Ropsten, and it will "happen soon." The 9th shadow fork recently went live, marking the beginning of the final testing phase of the merge. After the merge occurs, validators are free to start withdrawing the ETH they locked in the deposit contract.

Ethereum researcher Vivek Raman also said in an interview that from an economic perspective alone, Ethereum does have a chance to surpass Bitcoin due to the supply factor. After the merger, Ethereum's inflation rate will be lower than Bitcoin. Especially in the case of fee burning, Ethereum will be deflationary.

However, crypto researcher Mando tweeted that he is optimistic about ETH, but there is also a lot of misinformation about the Ethereum merger. First, the gas fee may not drop significantly (at least in the medium term), and secondly, ETH will not experience deflation, and its supply should increase by about 0.2% per year. Despite opposition, many analysts still believe that the merger will increase the profitability of the entire Ethereum network in the coming months. Although inflation continues to plague the global economy, Ethereum will become the largest deflationary currency.

Now, if the macro conditions continue to deteriorate, the situation for investors may completely change. Despite this, traders' optimism about Ethereum remains high as they have a lot of expectations ahead of the release of ETH's Merge. Data shows that the issuance of ETH is expected to drop by 90% after the merger. After the release of EIP-1559 last year, 80% to 85% of transaction fees were burned. This may result in more ETH being destroyed than issued. Currently, the yield on staking ETH is 3.9%, which is expected to soar to 6% to 7%. In turn, higher staking yields will lead to more ETH being staked. This will lead to higher security as it will become more expensive to obtain 51% of ETH staking. Increasing the yield will mean higher profitability for staking providers.

DeFi researcher Vivek Raman stressed on Twitter that the upcoming Ethereum merger will create a better economic structure for the smart contract platform. According to Raman, the shift to PoS reduces ETH's inflation, provides better security, and positions ETH as a digital bond. After the merger, ETH inflation will drop from 4.3% to 0.22%. He further explained that this reduces the issuance of its ecosystem by 95%, limiting the amount of ETH that can be sold in a day. Raman also claimed that after the merger, the platform will have better security. He cited an article by Ethereum co-founder Vitalik Buterin (V God) and emphasized that once the network runs on PoS, the cost of attack will be higher. In addition to this, Raman also believes that the Ethereum merger will enable ETH to complement Bitcoin's use case as a store of value and collateral asset. He pointed out that while BTC will function as digital gold, ETH will position itself as a digital bond, as well as collateral in DeFi.

Vivek Raman, head of proof of stake (PoS) at digital asset fintech firm BitOoda, also noted on Twitter that the Ethereum merge is one of the most powerful catalysts in crypto history, and it is rapidly approaching, transforming ETH into an economically (as well as environmentally and game-theoretically) sustainable asset, arguably more important than BTC. The next key date for merge watchers — the final testnet Goerli merge — is August 8-10. If it goes well, we may be aiming for a mainnet merge in late September, and then the crypto industry may be led by a new champion.

As the ETH merger approaches, whales are beginning to enter accumulation mode. Laurent Kssis, head of Hashdex Europe, said that ETH's recent rise is related to the optimism surrounding the upcoming Ethereum merger, which has encouraged many retail investors to seize ETH's investment strategy. However, Laurent Kssis also admitted that this rise may be short-lived because there are still strong sell orders in the market supported by ETH liquidation.

Hedge fund LedgerPrime also noted in a market commentary sent to counterparties that ETH appeared to have formed a base above $1.5K, where it began a new rise and climbed to $1.65K throughout the week, though significant resistance was found there.