Ethereum remains troubled after the Merge. What is the way ahead?

New Delhi: Ever since Ethereum's soft grade overhaul, named as the Merge, the second-largest crypto token has been struggling. The increase in rates by the US Fed has further added to its woes.

The Merge, which was completed earlier this month on September 15, changed its mechanism to proof-of-stake (PoS), making it more energy efficient. It used the Proof-of-Work (PoW) mechanism earlier.

Ethereum, which was expected to regain $2,000 levels post its software upgrades, was hovering around the $1,325 mark on Saturday. It recently tested $1,200 levels earlier this week.


The total market capitalization of Ethereum has dwindled sharply, and is marginally more than $160 billion, with volumes being flat at around $17.5 billion in the last 24 hours, the coinmarketcap data suggested.

What is hurting Ethereum?
Market experts believe that Ethereum has fallen prey to 'buy on rumours and sell on news' theory over the Merge, coupled with monetary tightening by the central bank. The vulnerability is high in the decentralized applications, they said.

Khaleelulla Baig - Founder - Koinbasket said Ethereum is losing steam as the US government's indication of treating it as a security instead of a commodity, thereby creating fear and uncertainty of tighter regulations and tax implications.

Trials and experiments carried out by mainstream web2 institutional investors to test waters in the crypto market are also causing some negative pressure on the overall crypto market spilling over to Ethereum, Baig added.

The platform has become less decentralized after the switch to the PoS mechanism, said Ashwani Kumar, Founder & CEO, HelperWorld. "The Ethereum merge or upgrade could make it easier for hackers to exploit bugs in the code."

The road ahead
The consensus of the market is weighted in favour of the Ethereum merger being successful, however, large-scale issues with the transition to proof of stake could be catastrophic for Ethereum's prices in the short term.

"Merge is one of the most highly-anticipated events in Ethereum’s history, and investors are paying close attention to the price of Ether," said Kumar. "More adoption will lead to more transactions and hence higher yields."

The merger will undoubtedly provide numerous benefits to the Ethereum network. It remains to be seen how the implementation of this upgrade will impact the network.

Ethereum has been a game changer in the world of cryptos and it's likely to retain its status, said Dileep Seinberg, Founder & CEO, MuffinPay, adding that there are some challenges over speed and gas fees, they too will be looked at.

"Ethereum will continue to remain the largest altcoin, but one should not expect an immediate run-up in the token as the market sentiments are jittered. One should wait for the dust to settle down before making any call," he added.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)