The change has been expected for a very long time, and it has finally happened: since September 15, 2022, the Ethereum blockchain has been operating with a proof of stake protocol. The event, which was called The Merge, will greatly reduce its energy consumption and make it a much more ecological tool.
But, despite the success of The Merge, since then the value of Ethereum has fallen sharply. While on September 15, 1 Ether was trading around $1,650, it was only worth $1,295 4 days later. An impressive fall of more than 20% — and for now, there is no indication when prices could recover.
The Merge, un impact positif ?
At first glance, such a fall just after The Merge seems unlikely. The passing of the proof of work to the proof of stake was a technical feat that came off without a hitch, which proved the technical robustness of my blockchain and its developers.
In addition, The Merge allows Ethereum to greatly reduce its energy consumption: in order to produce a new block, it is no longer necessary to mine it, that is to say to put computers in competition to find the answer to an equation. Now, these are holders who are responsible for validating the new blocks, thanks to an Ether deposit mechanism. With The Merge, the Ethereum Foundation estimates that the energy consumption of the blockchain will drop by 99.95%.
These two news, which make it possible to register the crypto-currency in the long term, should have allowed its course to rise. The fact that we observe the opposite could therefore seem particularly surprising – but some analysts had predicted it.
A predictable decline
Why do we observe this drop? As usual, there are several answers. First of all, it must be taken into account that in anticipation of The Merge, Ethereum prices had inflated. Interviewed by CNBC, Anto Paroian, the leader of the ARK36 investment fund specializing in crypto-currencies, explained that Ethereum had gained 100% in value since June, when it had reached its lowest level in the world. year, at $993.
« It seems likely that the positive effect The Merge has had on its price won’t be lasting. “, he had predicted. ” Many investors are expecting a one-time event, which means that after the first rise, we will definitely see the price of Ethereum fall during the following days and weeks. ».
This decline is further accentuated by the poor overall health of cryptos – commonly referred to in the industry as a “ bear market “. Year-to-date, major digital currencies are down more than half in value from their past year highs. Although improvements have been visible for several weeks, the market remains very unstable.
Finally, the indicators are not very good either at the macroeconomic level, in particular because of the increase in the rates of the European Central Bank (ECB). This decision by the ECB will have the effect of increasing lending rates, which means that borrowing money will be more expensive for companies and individuals. In this context, investors generally fall back on safe and low-risk values – and therefore, away from cryptos-currencies, still seen as a very unstable investment.
Will Ethereum ever go up?
Will the price of Ethereum go up one day? As always, when talking about stock values or cryptocurrencies, the answer is not clear. However, do not despair: according to analysts, the market decline should not last forever.
Thus, the specialized newspaper Blockwork estimated at the end of August that Ethereum should reach a value between 1,850 and 2,000 dollars after The Merge, while Bloomberg predicts that the cryptocurrency should reach 4,000 dollars by the end of the year 2022.
Finally, on the longer term, Gareth Soloway, a trader interviewed by Beincrypto, is very optimistic. ” I think in five years you could easily be looking at $20,000 for Ethereum “. Rather good news for Ethereum.