The wait for the long-awaited Ethereum merger has only been lengthened, prompting analysts to discuss possible Ethereum price changes.
The launch of Ethereum 2.0 or Eth2 involves a shift from Proof of Work to Proof of Stake, which is said to make Ether (ETH) a deflationary asset and revolutionize the entire network. This event has been a hot topic for years, and while anticipation for the “merger” has been building over the past few months, Ethereum core developer Tim Beiko told the world this week that “it won’t be June, but the most likely months later.” . There is no exact date yet.”
Delays in Ethereum network updates are nothing new, and so far the immediate impact on Ethereum’s price following the exposure has been minimal.
Here’s what several analysts had to say about what the merger means for Ethereum and how this recent delay could impact ETH’s future price.
Staking Rewards expects the merger to be a short-term boon
According to Beaconscan, over 10.9 million ETH is currently staked on Beacon Chain, which translates to a gross staking reward of 4.8%. According to a recent report by cryptocurrency data provider Staking Rewards, this staking level gives validators the opportunity to earn a 10.8% net staking return.
The current level of stakes represents 9% of the circulating supply of Ether, but several obstacles, including the inability to withdraw staked Ether or rewards from the Beacon network, limit wider participation.
In the post-merger world, Staking Rewards expects the amount of ETH staked to increase to 20-30 million ETH, which will “generate a net validation income (staking income) of 4.2% to 6%.
While the merger has several benefits for the Ethereum network, including reducing the circulating supply of ETH through burning and staking, some of the main issues the network is facing remain a concern.
Chief among these are high transaction costs, complexity of use, and network congestion, leaving the door open to competing networks offering comparable staking rewards and cheaper transactions to increase their market share.
Hayes advocates Ethereum Bonds
Major events like a merger often morph into a “buy the rumor, sell the news” event in the cryptocurrency sector, but some analysts say it would be a mistake to assume this for Ethereum.
According to decentralized finance (DeFi) educator and Twitter user Korpi, there are many factors that will change the supply and demand dynamics for Ether post-merger.
The triple halving refers to the fact that post-merger ETH issuance will be reduced by 90% that “it would take three bitcoin halvings to achieve an equivalent supply reduction.”
Other bullish factors include a potential increase in staking rewards as stakers also receive unburned revenue from the fees currently going to miners, and an increase in institutional demand due to the ability to apply a discounted cash flow model to Ethereum, which “ that’s what it is that institutional investors have to approve multi-million dollar investments.”
Essentially, after moving to Proof-of-Stake, institutional investors could start looking at Ethereum as a form of internet bond, a viable alternative to US Treasuries.
This concept was explained in detail in a recent post by former BitMEX CEO Arthur Hayes entitled “Five Ducking Digits”. makes ether a bond.”
Hayes provided the chart below that illustrates how much value Ether can lose while investors still break even compared to the US bond market.
ETH/USD breakeven price expressed as a percentage of the $3320 spot price. Source: Media
Based on this chart, the price of Ether could fall by 32.6% at an interest rate of 8% and still be equivalent to a 10-year bond with an interest rate of 2.5%.
With many analysts making long-term ether price predictions of $10,000 or more, many US bond investors could be looking for returns from ether interest rates rather than the US bond market, provided the institutional infrastructure is in place to support these types of investments. . and approved.
See Also: Ethereum Price Bull Triangle Nearing 4-Year Highs Against Bitcoin
Multiple ways to merge trades
Regarding trading, a Twitter user using the pseudonym “ABTestingAlpha”