Decoding Chainalysis’s Claims About ETH Price Post the Ethereum Merge

Decoding Chainalysis’s Claims About ETH Price Post the Ethereum Merge

Ethereum, the second cryptocurrency, has become quite popular among investors, traders, and even developers in Bitcoin's wake. This can be purely attributed to Ethereum's upcoming merge.

The Merge will divide the Ethereum network into smaller data blocks, making more transactions at a more incredible speed in a process known as sharding. After sharding, Ethereum 2.0 aims to process 100,000 transactions per second.

Most importantly, almost everyone is concerned about its price. How much is it worth now? How much will it be worth after the merge? Will the merge affect the price? If yes, will the effect be positive or negative?

Ethereum (ETH) Price Analysis

While no one can say what the price will be after the merge, all can just speculate. And today, on the 1-hour Ethereum price chart, ETH has continued upward in its trajectory and is now testing the $1,600 – $1,700 zone.

<em><i>1hr chart of the ETH?USDT trading pair, showing retest of the $1,650 zone | Source: </i></em><a href=''><em><u><i>Tradingview</i></u></em></a>
1hr chart of the ETH?USDT trading pair, showing retest of the $1,650 zone | Source: Tradingview

This upward retest of the $1,600+ zone happened because the bears could not push the price lower than $1,420.

This may or may not be related to the buzz around the upcoming merge, but Ethereum now trades at its highest against bitcoin in a while.

If the bulls push prices above the $1,720 zone before the merge, we may see a test of the $1,800 – $2,000 zone.

Ethereum Price Action Post Merge

Analysts from crypto analysis firm, have suggested that Ethereum's price may experience a slight dissociation from the prices of other cryptocurrencies post-merge.

The new Proof-of-Stake Mechanism will provide staking yields attracting massive institutional adoption.

In a report published, analysts at Chainalysis explained that institutional investors may be attracted by the staking rewards on the new Ethereum chain and may start adopting the network massively.

These staking rewards may be especially attractive to investors since they are expected to be similar to bonds and other commodities and are now on a new eco-friendly chain.

According to this report, ETH staking is expected to offer a 10% – 15% Annual Percentage Yield (APY) to its stakers, thereby making Ethereum a desirable choice. With this APY, ETH becomes "an enticing bond alternative for institutional investors." Especially since bonds themselves offer much lower annual yields.

Ethereum Adoption Will Increase

According to this report, the number of Ethereum institutional investors (with $1 million worth of staked Ethereum) was well below 250 as of January 2021 and has increased to about 1,100 as of August this year.

Suppose this number continues to climb as the Ethereum merge approaches. In that case, it will confirm that the staking rewards on the new Ethereum chain are indeed an attractive venture for these investors.

Another factor that may drive this price dissociation is miners' massive decrease in energy consumption. The new Ethereum chain is expected to operate on a Proof-of-Stake mechanism. It will consume less than 2% of its energy as a Proof-of-Work chain.

This new development may create better sentiment around Ethereum, especially since some investors have 'sustainability commitments' that make investing in its Proof-of-Work version difficult.

Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.

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