Merge effect on Ethereum: next step $ 2,000?

 

The merge effect is starting to be felt on the ETH price, once again arousing the interest of many investors. What will be the fate of Ethereum?

Since the lows in October, the price of Ethereum has grown by 26% . The performance of the mother of ERC tokens is higher than the market benchmark , typically represented by Bitcoin .

In June, after breaking down the $ 1,000 level, ETH was taken for granted by most decentralized finance analysts. In full contrast to the general sentiment , the price remained higher than the previous lows , again stimulating investor interest.

What does merge mean for the value of ETH?

Completion of the merge had major technical consequences in Ethereum's consensus mechanism. This of course has a significant mathematical impact on supply regulation.

First of all, the introduction of a PoS system resulted in the elimination of the mining process that forced the ecosystem to create new ETHs to reward miners . This change could therefore result in a reduction of more than 90% of the issuance of new ETHs .

Furthermore, the introduction of a staking-based mechanism tends in the long run to facilitate the growth of the price of a token . This is because the staking process actually withdraws ETH from the market , thus reducing the presence of supply and leaving more room for demand.

Is the price of Ethereum actually rising?

Investors accustomed to an idyllic crypto world, in which the value of a token grows in multiples of two (x2, x4 etc.), will surely think that Ethereum has not suffered any " merge effect ".

In reality, since the lows of June 2022, the price of Ethereum has grown by almost 80 percentage points and for many months it has been one of the few performing assets on the crypto scene. Unfortunately, the market, especially the cryptocurrency market, tends to ironically move in the vicinity of important events: the week in which the conclusion of the conversion of the merge process was announced, the price of ETH reached the numerary of $ 2,000 , and then collapsed to the $ 1,200 , while decreasing the hype created by the good news.

From September until October 24, the price of ETH went through a major phase of accumulation , and then exploded back to the $ 1,600 mark.

What to expect from the future for the price of ETH?

ETH / USD - 1W -HA Heikin Ashi candlestick chart on weekly time frame

Graphically, the price of the Ethereum cryptocurrency has broken up a fundamental descending trendline that accompanies the graphical trend of the asset since November 2021. Although the RSI indicator indicates the achievement of an overbought zone , it is important to emphasize that in the past the reaching those levels has typically indicated strength for the continuation of the trend , and not necessarily an area of ​​probable reversal .

Moving on to a weekly timeframe we can see that even Heikin Ashi candles signal the possibility of an upside . In fact, this week is the first green candle following a series of red candles: statistically this pattern often indicates the start of a new technical trend .

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