Will the growth of Ethereum continue due to the upcoming merger, or is it a trap for bulls?
ETH has gained 48% over the past week, leaving behind most of its crypto counterparts, although there are still a few risky days ahead, given the current macroeconomic factors.
Ethereum is outpacing the broader cryptocurrency market as the long-awaited merger approaches, but the overall picture is still broadly bearish.
Ethereum (ETH) has gained a whopping 48% in the last seven days, ahead of its older brother Bitcoin (BTC), which managed to gain only 19% over the same period. Ethereum also grew by 66% compared to the bottom of the market cycle of $ 918 on June 19, reaching the current price of $ 1,549.
However, the current ETH rally may prove to be a trap for bulls as macroeconomic clouds thicken. A bull trap is a signal indicating that the downtrend in a crypto asset has turned around and is moving up, whereas in fact it will continue to decline.
The main driver of the recent momentum for the asset was related to the announcements of its final transition to Proof-of-Stake (PoS), which is scheduled for September 19.
The merger will reduce the power consumption of the network by more than 99%. However, this will not necessarily significantly reduce transaction fees, as this will happen when scaling will occur through segmentation, which is expected sometime next year.
On Tuesday, the Coinbase merger report explains that the next important step and the last dress rehearsal is the merger of the Goerli test network, which is scheduled for August 11.
Goerli is the most proven Ethereum environment with the highest user activity and simulation as close to reality as possible.
While a major update is the fundamental driving force behind the current sentiment in the ETH market, the asset is still trading down 68% from the historical high of November 2021.
There were also concerns that a significant amount of ETH could flood the market after the merger and its release from smart stacking contracts.
However, the director of Research at 21SharesEliezer Ndinga said it was unlikely to happen:
"The withdrawal of Ethereum will be possible only 6-12 months after the merger after the Shanghai update. Withdrawals will be limited to six validators every epoch or ~6 minutes in order to avoid "fleeing the bank" and ensure the safety of the network."
A recent Finder survey conducted before the most recent rally says that there is still a lot of negative sentiment regarding short-term Ethereum prices.
A group of 54 industry experts surveyed believed that by the end of 2022, ETH would cost $1,711, and by 2025 - $5,739, and by 2030 - $14,412. However, they also believed that it would drop to $675 before the end of the year.
Finder pointed out several macroeconomic factors that could cause this retreat. The US Federal Reserve is expected to raise rates by 75 basis points again during the July 26-27 meeting, which is generally a bearish signal for cryptocurrency markets. If Bitcoin (BTC) dives down, Ethereum will definitely follow it.
In addition, on July 28, the U.S. Bureau of Economic Analysis (BEA) will publish a preliminary estimate of GDP growth in the second quarter. Another negative quarter is expected, which will mean that the country is in a technical recession, which is also very bad for risky assets such as Ethereum.
https://coin-signal.com/ethereum/will-the-growth-of-ethereum-continue-due-to-the-upcoming-merger-or-is-it-a-trap-for-bulls/
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