Ethereum, the second-largest cryptocurrency in market capital, has seen a 45 percent increase over the past week. This is more than the most other betable assets. This could have a simple explanation:
As Ethereum’s team of developers approaches the conclusion of a multiyear, extremely difficult upgrade, traders are shifting positive.
Ethereum, which is the second largest cryptocurrency by market capital, has experienced a surge of around 45% in the past week. It outperforms most of the top 100 digital assets. While there are many theories surrounding ETH’s bullish trend, one of the main drivers of price movements is the impending Ethereum merger.
As developers near completion of a multi-year, very difficult upgrade, trading in ETH has moved from bearish towards bullish. With intense social expectations of the Merge, 56% of ETH’s total profit has risen to 56%. This is a significant increase from the 41% lows just prior to the current price surge.
ETH/USD trades with new bullish momentum
According to statistics from Glassnode, a significant clearing out of short positions in the futures market was the reason for Ethereum’s 22 percent gain this week.
“Over $98M in short futures positions were liquidated in one hour, pushing $ETH prices up by 12.5%.”
The Number of ETH Addresses in Loss (7d MA) reached a 1-month low of 39,112,029 at press time, further demonstrating ETH’s recent bullish trend.
There is still time to complete The Merge, as the last actions that will transfer Ethereum activity directly to the Beacon Chain are set for September. Superphiz.eth a Ethereum educator stated in a Tweet, that Goerli will undergo the merging transfer at the last public testnet, August 11.
If everything goes according to plan, the mainnet merger is expected to float in the week of September 19.
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Youwei Yang, director of financial analytics at StoneX, says that two “certainties” are the cause of this upward rise for EthereumThe first is the recently announced time for the Ethereum “merge” update, which should make the network significantly more energy-efficient. Yang claims that the “calming” of macroeconomic anxieties is the second.
“Actually if you see the price movement tick by tick, this time it’s more like ETH leading BTC [or Bitcoin] instead of the other way around in usual times, so it’s a strong indication of ETH-led bear market rally with the confirmation and sentiment of ETH2.0,” said Yang, referring to post-merge Ethereum.
In his most recent episode of “The Breakdown,” famous podcaster and devoted industry watcher Nathaniel Whittemore made this assertion. There is a growing understanding that “the Merge” might influence markets on Twitter, Discord, and everywhere else people debate cryptocurrencies.
After months of low prices, the event suggests, as Whittemore put it, a “return of optimism” in the cryptocurrency markets. The Merge also fills a “narrative void,” allowing crypto enthusiasts to tell others stories about how this technology is changing the world.
Others think that the Merge may be causing ETH prices to rise due to structural reasons. Investors who invest in Ethereum will be rewarded with an upgrade that changes the potential uses of Ethereum. This upgrade could also lead to Bitcoin-like inflationary forces that further benefit the holders. In this scenario, people who have purchased ETH in preparation might view it as more of an investment than a transaction.
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Featured image taken from The Shutterstock. Chart from TradingView.com