The Ethereum Merge Is Complete. What Investors Should Know About How It Will Influence the Price

An ethereum mining rig is on display at the Thailand Crypto Expo 2022 on May 14, 2022, in Bangkok. Ethereum is gearing up for a major network move by transitioning from proof-of-work to proof-of-stake. Lauren DeCicca / Getty Images
An ethereum mining rig is on display at the Thailand Crypto Expo 2022 on May 14, 2022, in Bangkok. Ethereum is gearing up for a major network move by transitioning from proof-of-work to proof-of-stake.
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It’s a big week for ethereum: Its big merge is complete, and investors could see big price movement as a result.

And that’s on top of pre-existing economic factors that have throttled ethereum, which has hovered around $1,600 since dropping below that level on Tuesday following the release of August inflation data Tuesday. Ethereum fell below $1,500 Thursday morning as the impacts of the merge started to take shape.

The major network upgrade saw ethereum transition from proof-of-work to proof-of-stake. The upgrade was mean to address concerns about its environmental impact and dramatically improve its transaction speed, among other improvements, according to Ryan Grace, head of digital assets at Tastytrade, a financial network that focuses on market analysis. 

“While many variables influence the price of ETH, the move to proof-of-stake is estimated to reduce the amount of ETH issued per block by around 80%,” Grace says. “It will also result in more efficient and cheaper transactions, which could lead to an increase in demand across the ethereum network.”

Experts have also said the merge has potential to boost the value of ethereum, which like bitcoin is facing ongoing challenges amid broader economic uncertainty. So ethereum prices could still rise in the coming days, and they could also fall, with another Fed rate increase expected to be announced next week. In other words and like always, the only thing you can truly count on is more volatility.

Ethereum Price: What’s Going On? 

Ethereum, bitcoin, and other cryptocurrencies continue to be as volatile as ever — largely driven by ongoing macroeconomic uncertainty. 

Ethereum has swung between $1,400 and $2,000 in recent weeks. After rising over the past week, ethereum’s price plummeted Tuesday following the release of August inflation data. While a successful merge could boost ethereum’s prices, another Fed rate increase next week could bring them right back down

Cryptocurrencies have been moving in tandem with stock markets in recent months, which have had a rough year amid ever-increasing inflation, shaken investor confidence, rising interest rates, and recession fears. The S&P 500 has fallen more than 13% in 2022, while the tech-heavy Nasdaq has been hit harder, down 23% this year.

Experts are divided about the next directional move for ethereum. While some believe the merge will be transformational for ethereum and boost its price significantly, others are more skeptical. Whatever happens with ethereum’s price over the next few months will ultimately depend on how successful the merge is. A software upgrade this big can easily be susceptible to bugs or technical issues, so the outcome of the merge has huge implications not only for the ethereum network but for all of crypto. 

“This merge has been talked about for a long, long time, and it’s finally coming close. And I do see that as a pretty big catalyst for attention coming back into altcoins,” Osprey Funds CEO Greg King told Coindesk.” It has a lot of potential — they just need to solve their bottleneck issues. The merge should help that.”

What Should Crypto Investors Know About the Ethereum Merge?

After years of being the top smart contract blockchain, ethereum is transitioning to a less energy-intensive technology. So, what does this mean for your crypto investments?

Some experts say there is upside for ethereum investors, but it’s impossible to say with certainty. Some are calling for the price of ethereum to rally to upwards of $10,000, while others remain bearish. But it’s all purely speculative right now — many are waiting to see how investors and companies building their tech on ethereum’s platform respond to the changes. 

If anything, the merge shouldn’t affect your long-term investment strategy. It will take a while until everything is in place, and other factors such as increasing regulation could affect ethereum and other cryptos during this time. Instead, use this time to focus on strengthening your knowledge about crypto and blockchain tech and assess your risk tolerance for crypto. 

Experts recommend maintaining less than 5% of your portfolio in cryptocurrency because it is such a new, speculative asset class. As with any investment, don’t invest any more than you’d be OK losing.