What could happen to Ethereum post-Merge?

Many crypto insiders believe $ETH will pump into the Merge — with options data showing a less bullish view the month after. The London Hard Fork on August 5, 2021, was one of the last major upgrades to the network.

• One month before the upgrade: $ETH rose nearly 30%.
• One month after the upgrade: $ETH jumped another 40% before pulling back.

The Merge is much more significant than last year’s upgrade, but we’re also in a different economic environment this year.

Bigger picture: The macroeconomic state will play a large part in price movements. Until we see signs that the Fed is ready to slow interest rate hikes, or until inflation is steadily falling, investors are unlikely to fully move back into risk assets like crypto.

While speculative trading may drive short-term prices, the Merge has big impacts on $ETH’s long-term fundamentals — with many expecting the changes on Ethereum to occur over many months.

The big change: The Merge brings the Ethereum blockchain network from Proof of Work (PoW) to Proof of Stake (PoS).

• Before: Ethereum miners spend lots of money buying computer hardware and electricity to “mine” $ETH. To pay for those expenses, miners sell the $ETH they acquire.
• After: With PoS, there will be no mining — which means less selling pressure. With staking, there are few expenses and Fred Wilson of Union Square Ventures thinks most earned $ETH will be re-staked (AVC).

His guess: $ETH will go from a system with $20M daily outflows to one with $500K daily inflows — which will have big implications on its price.