Try Quests to earn cryptoETH Merge: Selling Event? [Ethereum]
Introduction
On September 15, Ethereum completed the "Merge" process. The system is transitioning from "proof of work" to "proof of stake." The adjustment for a greener planet in transaction processing eliminates the blockchain's hitherto computationally expensive validation. In addition, the upgrade would replace the existing system of rewards with one of penalties.
The Merge is a long-awaited upgrade to the Ethereum network, transitioning it from an inefficient proof-of-work protocol to a far more efficient proof-of-stake structure. Both are methods for operating the blockchain system that organises and records every bitcoin transaction.
Here are the principal distinctions between the two: In proof of work, the cryptocurrency depends on "miners" to mine crypto currencies by completing complicated mathematical computations using graphics processors that use considerable amounts of electricity.
In proof of stake, the validation of transactions is dependent on the coin's owners, or stakeholders. For doing so, stakeholders might get incentives.
In transitioning to Ethereum 2.0, the cryptocurrency will continue to record transactions using the proof-of-work protocol, but the Beacon Chain will record transactions using the proof-of-stake protocol.
"Ethereum will not stay a single chain and simply 'evolve' to Ethereum 2.0; rather, the chain will 'fork' and a new chain will branch out from the original to begin a new algorithm and data chain of transactions," claims the CEO of a digital asset exchange, Blockparty.
This new approach includes a new set of incentives for bitcoin participation.
In the proof-of-work mechanism, incentives are arbitrarily awarded to a computer in the blockchain-managing distributed computer network. Therefore, miners are motivated to have more "nodes" in order to enhance their chances of receiving the payout. In a proof-of-stake system, however, those with the most bitcoin receive the highest rewards.
Ginzburg proclaims, "This is a major development." In 2.0, the incentive structure shifts, motivating Ethereum operators to accumulate and keep as much [Ethereum] as feasible.
This shift in incentive structure might have a significant effect on the price of Ethereum.
The modifications to the Ethereum protocol will result in a variety of advantages for the cryptocurrency system, including increased efficiency and scalability, therefore strengthening the platform. It might also increase the value of the Ethereum token since it incentivizes hoarding, and it could generate short-term challenges in other sectors, such as graphics chips.
- The price of BTC has decreased in parallel to that of ETH after Merge happened, so that the price of BTC has decreased from $21.599k on Sep 11, 2022 to 19.99k on Sep 15, 2022.
- Therefore, it can be said that The merge not only has negatively affected the price of ETH, but also it has affected the price of BTC as well.
- As clear from this graph, the price of ETH has decreased after the Merge Happened from $1764 on Sep 11, 2022 to $1563 on Sep 15, 2022. This shows negative effect of Merge on the price of ETH.
PART I: Changes in ETH Price Before and After the Merge
- On Sep 15, 2022, we see an increase in the amount of ETH swaps that has reached to its peak on Sep 15, 2022, so that 1.35M of ETH has swapped on Sep 15, 2022. However, this increase in ETH swaps has immediately decreased sharply on Sep 16, 2022 to about 50k.
- In the second graph it is seen that the total amount of ETH swapped is 2,526,155.591 before Merge, while it is 2,236,303.11 after Merge. This means that the amount of ETH swapped has somehow decreased after Merge happened.
- According to the data shown in two graphs above, the majority of ETH swaps has been done by users (99.4%) other than miners and only a part of ETH has swapped by miners (0.571%).
- This means that the Merge has more affected normal users to do transactions.
- As shown above, the amount of ETH sold before merge (57,637,776.95, 75.5%) is more that that after the merge happended, so that the amount of ETH sold after the Merge is 18,704,399.97.
Conclusion
The following findings were revealed by visualizing the data related to ETH before and after the Merge happened. These findings are as follows:
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The price of ETH has decreased after the Merge Happened from $1764 on Sep 11, 2022 to $1563 on Sep 15, 2022. This shows negative effect of Merge on the price of ETH.
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The price of BTC has decreased in parallel to that of ETH after Merge happened. Therefore, it can be said that The merge not only has negatively affected the price of ETH, but also it has affected the price of BTC as well.
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The amount of ETH swapped has somehow decreased after Merge happened.
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The majority of ETH swaps has been done by users (99.4%) other than miners and only a part of ETH has swapped by miners (0.571%). This means that the Merge has more affected normal users to do transactions.
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The amount of ETH sold before merge (57,637,776.95, 75.5%) is more that that after the merge happened, so that the amount of ETH sold after the Merge is 18,704,399.97. However, the cumulative amount of ETH sold is more after the merge (53.7%) compared to that before the Merge (46.3%). Therefore, it can be said the more ETH has been sold after the Merge that can be interpreted as a negative effect of Merge on ETH.
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Cumulative amount of ETH bought after the Merge event is more (39,526,706.68) than that before the Merge /936,151,198.74).
Despite a fundamental shift in its emissions dynamics, the cryptocurrency's price has declined by more than 20% after a "sell the news" price increase. Ethereum ditched Proof of Work on September 15, 2022. The year's biggest industry event.
ETH was trading at $1,600 before the combine and rose to $1,650 afterward. The bears then drove the price below $1,300 to a 2-month low. At the time of writing, ETH is trading at$1,330, down 8% in 24 hours and 20% since the merger.
Many believed this caused "rumored buy, sell news" trading. Investors bought ETH after the merger date was announced earlier this year. Many likely bought ETH in anticipation of the ETHW airdrop. Macroeconomic conditions remain tough, and markets await the Fed's interest rate decision this week. Regardless of price, the merger has boosted ETH's market value. This changes ETH's daily issue. Compared to the PoW period, fresh ETH supply has dropped more than 90%. The huge drop in ETH supply could boost the price if demand remains stable or rises.
There is a risk that the Merge will be an instance of "buy the rumor, sell the news." A few days prior to the event, there may be a surge in the price of ETH, followed by a decline to former levels after the upgrade is complete. This is a pretty regular occurrence in the cryptocurrency markets, which are still predominately dependent on speculations: people generate interest and excitement about an approaching fundamental event, which eventually falls short of expectations.
- When looking at the cumulative amount of ETH sold before and after the Merge, we see that the cumulative amount of ETH sold is more after the merge (53.7%) compared to that before the Merge (46.3%).
- Therefore, it can be said the more ETH has been sold after the Merge that can be interpreted as a negative effect of Merge on ETH.
- Regarding the amount of ETH bought, it is seen that the amount of ETH bought has considerably decreased after the Merge happened, so that the highest amount of ETH bought before the merge is 459.47k on Sep 13, 2022, while this amount has sharply decreased to 162.47k on Sep 17, 2022.
- However, the second graph shows that totally, the amount of ETH bought before the Merge is 4,411,751.175, while this amount has slightly increased to 4,690,451.141. Therefore, it can be said that the Merge event has a positive effect on the tendency of users to buy ETH.
- Cumulative amount of ETH bought after the Merge event is more (39,526,706.68) than that before the Merge /936,151,198.74).