The Ethereum Merge is one of the most significant events since the birth of the crypto industry. The event moved the ETH blockchain from proof-of-work to proof-of-stake. Despite being a great technical success, the Ethereum price has since fallen. Some analysts even expect the ETH price to plummet further in the coming weeks.
Will the Merge become a ‘buy the rumor, sell the news’ event?
Ether outperformed Bitcoin in the weeks leading up to the Merge. This was attributed to the ‘hype’ surrounding the upgrade. However, some experts fear that the Merge will be a ‘buy the rumor and sell the news’ event.
‘Buy the rumor and sell the news’ is investor wisdom that we often see in the capital markets. It often takes place at important events with high expectations or economic reports. In the run-up to these events we often see the price rise, the news is priced in by investors. If the event has actually taken place, we often see a drop in price. The hype surrounding the event is gone.
Popular crypto trader Lark Davis is happy with the Merge despite the price drop. In a tweet he said it is a fundamentally bullish event, especially over the long term. In the short term, however, the effect will be disappointing and that will create a ‘sell the news’ effect.
Other analysts also expect a further fall in Ethereum in the near term. In the long run, however, most analysts are bullish on Ethereum. In time, the largest altcoin in the world will benefit from the important network upgrade.
Ethereum Merge Doesn’t Solve Fundamental Problems Yet
Experts have explained why the effects of the Ethereum Merge are not immediately apparent. The transition will change the blockchain consensus mechanism to Proof-Of-Stake. However, this fact alone will not solve the network’s other fundamental problems. For example, it will not address the issue of excessive transaction costs, nor will the Ethereum network suddenly become more scalable or faster.
Earlier today, Newsbit also wrote in an article that the number of Ethereum tokens has increased after the Merge. This while some had expected that the network would immediately be defective.
So it seems that Ethereum needs a little more time to reap the real benefits of the Merge. In the coming months, the team will work hard to implement updates that will make the network more scalable, cheaper and faster. We may see the price skyrocket again.