Updated on January 26, 2023 10:01 AM
The long-promised and frequently delayed "Merge," a technical change in how it operates, was eventually completed by the Ethereum blockchain, which underpins much of the cryptocurrency industry, last month.
One of the most popular digital ledgers in use today, the Ethereum blockchain serves as the foundation for Web3, non-fungible tokens, and decentralized finance. While the Merge is unquestionably excellent for the environment, it also highlights other issues with the Ethereum network.
Blockchains rely on what is known as a "consensus mechanism" in place of centralized middlemen like a bank to authorize transactions.
Investors in ETH who believed the switch from proof of work to proof of stake would boost their finances have been left with declining returns on investment one month after the "Merge" over Ethereum's blockchain. Since the September 15 merge day, the price of Ethereum has been constant, virtually identically mirroring that of litecoin and bitcoin.
Technically, nothing has changed for Ethereum blockchain users as a result of the migration to proof of stake. They are identical in terms of code, addresses, accounts, balances, and wallets.
According to Vitalik Buterin, the founder of Ethereum, the merger will prioritize security and size. If one can call it such, the new Ethereum is touted to deliver scale comparable to the two biggest alternative blockchains, Polygon and Solona, which can process over 100,000 transactions per second.
In the Ethereum community and among blockchain users generally, there has been some worry that Big Tech censorship will someday encounter the cryptocurrency world.
Ethereum experienced a significant move upward on October 23 that brought it straight up against the 50-day moving average's local resistance level. Unfortunately, bears have increased their activity today and are currently driving the second-largest cryptocurrency to new lows. However, the effort at a breakthrough demonstrates that bulls can still seize power.
Ethereum entered the consolidation channel before the breakout, which might be a big indicator of an impending reversal because the asset has effectively avoided further negative pressure and begun moving sideways, which is a strong sign for an asset that wants to reverse.
Although the Merge's process and the current deflation are theoretically intended to raise prices, the time is simply not right. Any cryptocurrency's price is not solely determined by its supply and burn mechanism; liquidation also has a big impact.
In recent months, the U.S. Federal Reserve has rapidly raised interest rates. As a result, treasury bonds issued by the government have been yielding significantly, and these bonds carry far fewer risks than cryptocurrency. Additionally, there is increased regulatory pressure on the cryptocurrency market, and short-term investors are moving away from risky assets as the recession is out of control.
ETH liquidations have been particularly high over the last two months, according to Coinglass data. This is the main cause of ETH's price fall rather than gain, despite the currency's deflationary state.