ETH has gained 48% over the past week, leaving most of its crypto brethren behind — though it's still risky days ahead given the macroeconomic factors still at play.
Ethereum increased significantly in the past week
Ethereum is outperforming the broader cryptocurrency market because the highly anticipated Merge approaches, but the larger picture remains largely bearish.
Is it a bull trap?
Ethereum (ETH) has gained a whopping 48% over the past seven days, outperforming its big brother Bitcoin, which has only managed to realize 19% within the same period. it is also up 66% from its market cycle bottom of $918 on June 19, reaching its current price of $1549.
However, the present Ethereum rally may well be a bull trap with the macroeconomic clouds darkening. A bull trap may be a signal indicating that a declining trend during a crypto asset has reversed and is heading upwards when it’ll actually continue downwards.
The primary driver of recent momentum for the asset has been linked to announcements regarding its final switch to proof-of-stake, which has been slated for September 19.
The Merge will reduce the network’s energy consumption by over 99%. However, it’ll not necessarily reduce transaction fees significantly as this may occur when scaling takes place via Sharding which is predicted sometime next year.
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Research and Surveys on Ethereum
On July 19, a Coinbase report on the Merge explained that the subsequent major step, and last dry run, is that the Goerli Testnet Merge which has been planned for August 11.
Goerli is that the most battle-tested Ethereum environment with the foremost user activity and also the closest simulation of the important thing.
While the most important upgrade is that the fundamental driver of current Ethereum market sentiment, the asset remains trading down 68% from its November 2021 all-time high.
There have also been concerns that a major amount of ETH may flood the market after the Merge and its release from its Staking smart contracts.
However, director of research at 21Shares, Eliézer Ndinga, told Cointelegraph that this can be unlikely to happen:
“The withdrawals of Ether won’t occur until 6-12 months post Merge after the Shanghai upgrade. The withdrawals are going to be limited to 6 validators every epoch or ~ 6 minutes to avoid bank runs and keep the network secure.”
Related: Ethereum devs confirm the perpetual date for The Merge
A recent survey by Finder, conducted before the foremost recent rally sai there’s still plenty of negative sentiment regarding short-term Ethereum prices.
The panel of 54 industry experts polled thought ETH would be worth $1,711 by the tip of 2022, climbing to $5,739 by 2025, before hitting $14,412 by 2030. However, they also thought it might dump to $675 before the year was out.
Finder said there are a pair of macroeconomic factors that might cause this retreat. The U.S. FRS is predicted to hike rates again by 75 basis points during their July 26-27 meeting, which is usually bearish for crypto markets. If Bitcoin takes a dive, Ethereum is certain to follow.
Additionally, the U.S. Bureau of Economic Analysis (BEA) will release its advance estimate of second-quarter GDP growth on July 28. Another negative quarter, which is predicted, will mean that the country is in an exceedingly technical recession which is additionally very bad for risk-on assets like Ethereum.
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