The Ethereum (CRYPTO: ETH) price is up 5% since this time yesterday.
The world's number 2 cryptocurrency by market cap is currently trading for US$3,311 (AU$4,395).
The Bitcoin (CRYPTO: BTC) price is rallying too, also up 5% overnight to US$46,935.
But step back in time two weeks and the Ethereum price has gained an impressive 31%. That compares to a 24% gain for Bitcoin, according to data from CoinMarketCap.
So, why the outperformance?
Image source: Getty Images
Ethereum price rising ahead of software upgrade
What was formerly billed as Eth2 has now been rebranded 'The Merge'.
According to the Ethereum website:
This upgrade represents the official switch to proof-of-stake consensus. This eliminates the need for energy-intensive mining, and instead secures the network using staked ether. Ethereum Mainnet continues to be secured by proof-of-work, even while the Beacon Chain runs in parallel using proof-of-stake. The Merge is when these two systems finally come together.
Crypto analysts are broadly bullish on the Ethereum price in relation to The Merge.
According to senior analyst at Bloomberg Intelligence Jamie Douglas Coutts:
The Ethereum network's next major, ambitious milestone will likely catalyse millions of new adopters. Negative perceptions over energy consumption have plagued proof-of-work chains, so the response from the market to the Merge may be overwhelmingly positive, as energy use is expected to decline 99%.
Solidly in the overwhelmingly positive camp is Kain Warwick, founder of derivatives trading system Synthetix.
On the back of The Merge, Warwick last week forecast the Ethereum price will more than triple in 2022, reaching US$10,000.
"New people wanting to swap dollars for Ethereum and build on top were finding the fees completely prohibitive," Warwick said. "But there has been so much work done on scaling the Ethereum blockchain that there is a really credible case for new entrants where it is viable for them to transact."
