The Ethereum (CRYPTO: ETH) price is up 6% since this time last week, once again outperforming Bitcoin (CRYPTO: BTC). The world's original crypto is flat over the week.
Though still down 55% year-to-date, the Ethereum price moves have beaten those posted by Bitcoin in July and August. September may hold more of the same.
This comes as the Ethereum blockchain is poised to finally make the full transition from proof of work (PoW) to proof of stake (PoS) next week in a process dubbed the Merge.
Below, we look at the insights from four industry experts on what crypto investors can expect from the Ethereum price in the weeks ahead.
What is the Merge and what are the benefits?
If you're unfamiliar with the Merge (formerly known as ETH 2.0), the transition to PoS will see willing participants stake some of their Ether holdings to verify transactions and secure the blockchain. This will require far fewer computers than under PoW.
Developers have been working on the transition for several years now. And following recent successful trials, they're ready to go live.
Discussing the benefits, Ray Brown, head of marketing at CoinSpot, said:
The main benefit of the Merge will be to reduce congestion on the ETH blockchain and improve its energy efficiency, which is a huge bonus for the sustainability of digital currencies…
In simple terms, network participants will no longer require expensive and complex 'mining' computers to take part in earning ETH, this opens up the possibilities for everyday people looking to get involved.
Marc Meyer, senior director of products at Crowdz, said the Merge, which has been supporting the Ethereum price recently, is happening at an opportune time, noting surging energy prices across much of the globe.
"It will reduce the energy requirements by 99.5%, addressing a major flaw in the sustainability of cryptocurrencies," he said. "The merge is a major milestone in the further adoption of blockchain solutions and works to make the Ethereum main chain future-proof."
A work in progress
Even if the Merge comes off without a hitch, there's still work to be done.
According to Meyer:
While the Merge is the first of many steps and currently addresses energy consumption issues, as well as security, it does not necessarily solve congestion and fees. This is set to be addressed after the Merge with a process called sharding.
"The true extent of the changes are yet to be ascertained, with some predicting there will not be a huge difference in gas fees," Brown said.
Brown added that not everyone is a winner from the change:
For miners, the Merge is not great news. The change from PoW to PoS means miners will lose an income source from mining ETH's old proof-of-work chain with computing rigs containing high-powered graphics cards, processors and CPUs.
What's the likely impact on markets and the Ethereum price?
Gilbert noted that crypto investors should brace for some potential higher volatility in the weeks before and after the Merge:
This is arguably one of the most anticipated events on the crypto calendar this year, so there will likely be plenty of hype and that's been evident in the action we've seen from the Ethereum price, climbing 80% from its cycle low and well-outperforming Bitcoin.
Part of the reason we have seen this Ethereum price action is because the Merge is likely to decrease the overall supply of the asset, building its case as a store of value.
"In terms of ecosystem impact, the merge will enable drastically increased transaction throughput, which sets the stage for crypto mass adoption," James Kouzinas, director of business development at Crowdz, said.
Kouzinas added:
At present, decentralised systems do not have high enough transactions per second (TPS) to be considered an alternative to Visa and MasterCard but the merge changes this, and does so while maintaining its decentralised infrastructure.
Aside from Ethereum price volatility, what else can we expect?
Atop some possibly large swings in the Ethereum price surrounding the Merge, Gilbert recommends crypto investors take the long-term view:
With big events and so much anticipation, the 'buy the rumour, sell the news' adage comes to mind. Therefore, investors should remember to take a long-term mindset when looking at crypto assets.
A key factor that will determine its success is the security of the blockchain under a proof-of-stake as it moves away from proof of work. We've seen a lot of issues from proof-of-stake platforms like Solana and others, but Bitcoin's security as proof-of-work is unmatched.
Addressing potential security concerns during the transition period, Brown said:
This period may also prompt an increase in malicious activity or scams, so we remind all investors to refrain from sharing personal information or login details with any third party. Trusted exchanges will never ask you for this information, including over the phone.
