The debate over Ethereum's future
Oh wow, we're talking a lot about market pricing today.
But hey, why not - we don't do it all that often, and everything in moderation right?
This linked article tries to predict whether the impact of Ethereum's upcoming 'Merge' update has already been reflected in its price or not.
The answer they end up with, is this: ¯\_(ツ)_/¯
Here're the for/against arguments they made when trying to answer the question: 'Will Ethereum's price go up, post update?'
For a price increase:
Big institutional money is yet to invest into Ethereum, 'The Merge' update could tempt them - and if it happens, it has the potential to push the price way up!
Post Merge, Ethereum has the potential to become deflationary and increase its value - here's how that works...
The Ethereum network destroys a little bit of ETH for every transaction that is made → if The Merge attracts new users, transactions should increase → which means more ETH could be destroyed per year, than is created → which will make it more scarce, and more valuable.
Speaking of scarcity, The Merge will allow staking on Ethereum - which requires users to lock up their ETH for a set amount of time, in exchange for interest payments.
The more people lock up their ETH, the more is out of circulation → which lowers the available supply → which makes it more more scarce → which makes it more valuable.
Against a price increase:
If The Merge is delayed (which has happened many times) the market will likely lose confidence in Ethereum, in the short term.
(Not good for prices).
There are plans by some to 'fork' Ethereum after The Merge, creating a duplicate token that runs on the old network. This optionality could pull investment away from the updated version of Ethereum and dilute incoming investment.
Limited staking has been available on Ethereum to anyone holding 32 ETH (~$51k) or more, for about two years now. After The Merge update, these users will be able to access/sell their staked holdings again.
If enough of them decide to sell, this sell pressure could pull the price down.
Alrighty, now you know :)
Happy Tuesday, everyone.
