Following years of development, the cryptocurrency market most anticipated event, Ethereum transition to a new system of processing transactions dubbed “The Merge,” was a success. The event was completed at block height 15537393.
Now that Ethereum has merged its previous Mainnet with the Beacon Chain system, the Ethereum network employs the proof-of-stake (PoS) mechanism from the energy-intensive proof-of-work (PoW). This development sets the stage for future scaling upgrades, including sharding.
According to the Ethereum team, extensive testing and bug bounties were tackled to ensure the safe transition.
The Merge is different from previous network upgrades in two main ways. First, node operators need to update their consensus layer (CL) and execution layer (EL) clients in unison rather than just one of the two.
After the Merge, Ethereum will see a reduced energy consumption of 99.95% and slightly faster transaction speeds. However, the event will not result in a decrease in transaction fees in Ethereum.
Notably, PoW proponents argue that PoS staking has its own centralization and securities issues, which makes it possible for bad actors to directly “buy” control of the network. They also contend that PoS is less reliable than PoW, which has proven resilient as the foundation of Bitcoin and Ethereum networks.
Regardless, optimism among community members spread across the sector, with crypto movers like Erik Voorhees, Billy Markus, and Justin Sun celebrating the merge and congratulating Buterin and the Ethereum team.
Ethereum (ETH) price outlook remains positive
While Ethereum is set to be deflationary after the Merge, traders are positive about upside movement.At the time of writing, the ETH price is trading at $1,634.
According to IntoTheMoneyStocks founder Gareth Soloway, short-term crypto prices will be determined by how smooth the merge goes. “It’s going to be interesting to see how the merge goes. For the whole Bitcoin and crypto sector, I think this is a big test. A lot of people are sitting on the sidelines and saying okay, this is the biggest thing we’ve had in crypto in a while, can they pull it off without a hitch?” Gareth said in an interview with AltcoinDaily.
“With support at $1,450 level, if the merge goes smoothly, it could prop as high as $2000.”He added. “I ultimately think if bitcoin is going down, risk assets will see more selling. Ethereum will have another leg down and it needs to retest the lows around that $880 to $900 level, maybe lower.”
However, despite those worries, most investors remain stoked by the event and arebullish post-merge.“Most people are going to sell right after it goes live, but it’ll be a mistake,”said Jesse Eckel, founder of the $1 To $1 Million Project.“Hype isn’t what makes The Merge bullish; it’s the fundamental shift in economics moving forward. Ethereum + time is going to end up being the winning play long term.”
Investors are also keeping an eye on this week’s economic data, with CPI and Crude Oil Inventory reports taking centre stage. Tuesday’s Consumer Price Index “CPI” data will mainly affect how the Fed tackles the sky-high inflation during the upcoming FOMC meeting. A drop in August CPI figures could ignite a bullish momentum for Bitcoin, while higher-than-expected figures could further harden the expectations of a lesser restrictive monetary policy by the Fed, stifling markets.
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