Ethereum has been stealing more market share from bitcoin over the last couple of weeks. This is a result of the Merge announcement that took the space by storm about a month ago. Since then, interest in Ethereum has skyrocketed. But with the decline in price, investors are becoming warier about investing in the market. However, that does not mean that Ethereum is no longer a good buy.
The Upcoming Merge
For many, the news of the Merge is one that has been a long time in the making. This is why when developers announced that the Merge would be happening sometime around September 15th, the community erupted in joy. But besides just being an important upgrade, the upgrade has also served as a good buy signal for the digital asset.
Firstly, with the move to proof of stake, Ethereum will consume about 99.95% less energy than it used to. This means that the concern of environmental pollution is eliminated for the digital asset and takes it off the radar of governments who are looking to sanction cryptocurrency mining due to how much energy they consume.
ETH recovers above $1,600 | Source: ETHUSD on TradingView.com
Another good reason is the fact that the ETH staked on the Ethereum 2.0 contract will not be automatically released. Presently, there is more than 11% of the total supply of ETH staked, with more being added daily. Developers have announced that there is no withdrawal function being put into the upgrade. This will likely come 6 months to 1 year after the Merge. Simply put, ETH will remain locked on the network for another 6 months to 1 year, causing the circulating supply to decline.
Ethereum Still Looks Bullish
Ethereum is still one of the most bullish cryptocurrencies in the market right now. The exchange net flow shows a marked accumulation trend among investors in the space. In the last 7 days, over $6.2 billion has been moved out of centralized exchanges, with the daily net flows following the same trend.
The transaction fees of Ethereum have also declined significantly, making it a good time for investors to move assets across the network. At the time of writing, ETH transaction fees sit at 11.74 GWEI, or $0.4.
The digital asset has also been able to fend off the bulls. With the price still sitting comfortably above the 50-day moving average, ETH has been one of the only cryptocurrencies in the space to reduce the selling pressure on investors.
To cap it all off, as the Merge draws closer, anticipation will likely continue to grow. If the case is the same as what was seen in the weeks after the announcement had been made, the price of ETH is likely to break $2,000 before the Merge.
Featured image from Finance Magnates, chart from TradingView.com
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Source: Crypto News