Ethereum merger confirmed for September. What investors can expect

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Ethereum merger confirmed for September.  What investors can expect
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One of the biggest events in crypto is just around the corner.


Key points

  • Ethereum developers have confirmed that the merger will take place in September.
  • The merger will shift Ethereum to the more sustainable proof-of-stake validation model, significantly reducing its power consumption.
  • In the short term, the merger could cause a lot of volatility for Ethereum.

It’s been a while, but we’re only weeks away from one of the most important cryptocurrency events of the year. Ethereum developers have confirmed that they will be rolling out the merger in September. Fusion will move Ethereum from the energy-intensive proof-of-work validation model to a more sustainable proof-of-stake system. With billions of dollars of applications on the Ethereum ecosystem, the stakes are high for ETH holders and developers using its network.

How the Ethereum merger will take place

According to a blog post, the developers have successfully completed all of its testnet upgrades and are now ready to launch the merge on the mainnet.

Change is a two-step process. First comes a network upgrade called Bellatrix on September 6th. After that comes the Paris upgrade. This will happen between September 10 and 20. Without getting too technical, the newly merged chain needs to reach a point where it won’t be vulnerable to attack before the team can fully flip the merge switch.

What investors can expect

If you’re a long-term Ethereum investor, the merger is an important step on a longer road to making the crypto giant more sustainable, scalable, and secure. Ethereum was the first crypto to be introduced smart contracts and still dominates the market. But it also struggles with network congestion and high gas charges – issues the Next large upgrade (called sharding) will process.

You might be tempted to try buy or sell Ethereum in the coming weeks to take short-term profit from merger-related price changes. The difficulty is that it is almost impossible to predict what will happen – that is why this type of trading is extremely risky. At The Ascent, we advocate investing for the long term rather than trying to time the market. Here are some of the factors that could contribute to short-term volatility:

1. Expectations are extremely high

Ethereum’s price has seen some significant gains in recent months, largely due to pre-merger speculation. Many people believe that the Ethereum merger will lead to lower gas fees. This will not be the case. It will also not improve transaction speeds. When reality fails to meet expectations, it could have a negative impact on the price of ETH. On the other hand, Vitalik Buterin, the man behind Ethereum, claims that the merger has not yet been fully mainstreamed.

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2. Speculation is rife

Crypto prices often suffer from a phenomenon known as “Buy the rumor, sell the news“As we approach a major event such as the merger, people speculate on large price increases. This can turn into a buying frenzy that pushes prices to unsustainable heights. Traders then try to sell at a high when the long-awaited event actually happens.Don’t assume that Ethereum’s price will rise on September 6 when the merger rolls out.

3. There might be unforeseen technical issues

Some have compared the Ethereum merger to changing the engine of an airplane mid-flight. This is not an easy task and there may be technical issues. Ethereum developers have tested and tested and tested again, but no amount of dress rehearsal can guarantee perfect performance in real life. For Ethereum investors, the hope is that the years of preparation and testing mean that the only issues we see are minor issues rather than something more serious.

4. Newly merged Ethereum could be seen as security

How cryptocurrencies are categorized can have a big impact on how they work in the United States. The SEC believes that many cryptocurrencies are actually titles and should be within its jurisdiction. This would involve following strict rules on how they disclose information and how it is exchanged. Right now, most cryptos are considered commodities and don’t have to jump through SEC hoops. However, some lawyers say the move to proof-of-stake means the SEC is more likely to view Ethereum as a security.

At the end of the line

Like a crypto investor, what really matters is your long-term view of Ethereum. If you view your investments through a 10- or 20-year lens, short-term price fluctuations around a specific event become less relevant. The key question is whether the upgrade impacts your original reason for buying Ethereum and whether you think it will perform well in the long run.

If we look at the big picture, Ethereum claims that the merger will reduce its energy consumption by more than 99%. It can also reduce the supply of ETH and increase the staking rewards investors can earn. Ethereum continues to be the largest crypto smart contract by far. Over 50% of the total money deposited with decentralized apps is locked to its ecosystem.

All cryptocurrencies carry risk, which is why it is important to invest only cash you can afford to lose. Make sure you understand the risks associated with both crypto in general and the specific asset you might be buying. One of the biggest risks for Ethereum is that it will be overtaken by new blockchain projects, which is why upgrades like the merger are important. That said, the merger could create unforeseen problems both technically and in terms of investments.

Don’t let merger headlines rush your investment decisions. Take the time to research the pros and cons and consider your own financial situation. Only you can decide how – and if – Ethereum might be a good fit for your long-term portfolio.

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