Many in the cryptocurrency community believe that it is the merger - which is the name given to the PoS transition procedure - that is the main trigger for ETH's price rise. Is this really the case? And has the merger exhausted its impact on the price of Etherium? That is, will the coin continue to grow? CryptoPotato experts tried to answer all these questions in their latest article.

Separately, we should note that there is no exact date of Etherium’s transition to the Proof of Ownership consensus algorithm, as that moment depends on the efforts of miners. The more miners work with the remaining fixed number of hashes, the sooner the network’s transition to PoS will take place.

Yesterday, Eth developers shared a new post on the Ethereum Foundation blog. In it, representatives of the development team indicate that the merger will take place between September 10 and 20. That is, the timeline for the update is exactly that.

The announcement of the merger on the Ethereum Foundation blog

Why is Bitcoin’s exchange rate changing?

In the cryptocurrency industry, the price of an asset is affected by a number of different factors. Major protocol updates can certainly be a catalyst for the bull run – and both positive and negative.

Generally speaking, there is a very popular theory in the coin niche that the crypto market moves in cycles – bullish and bearish. Its rise and fall is almost entirely dependent on Bitcoin price dynamics, which, again, many believe depends on halving.

Bitcoin’s strength

Halving is perhaps one of the most important events for Bitcoin in its cycle. This procedure halves the amount of BTC miners receive as a reward for creating new blocks and adding them to the blockchain. That is, there are half as many new coins on the market, which, given the same demand for them, pushes the price of BTC up.

There is also a theory that halving simply coincides with the timing of market ups and downs, so it does not in itself provoke a bull run. However, many investors agree on the big role of halving, so they act accordingly by buying coins. This, among other things, helps this "prophecy" come true.

Two previous halvings on Bitcoin’s 1-month chart

After the previous halvings, Bitcoin did not immediately start to grow rapidly. Its price fluctuated around the same levels as before the halving for quite a long time. This trend can be clearly seen in the chart above, where the days of the two previous halvings are represented by arrows.

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In other words, before the date of the procedure, the market had already “factored in” the fact that it would happen. That is, most of those who were counting on BTC growth after halving, were buying coins before the halving. Because of that, Bitcoin did not grow at a fast pace immediately after the halving, because there were simply not enough buyers in the market, because they had already “factored in” the halving.

Now moving on to Etherium.

Why is Etherium’s move to Proof-of-Stake so important?

Today, Etherium still operates on the Proof-of-Stake (PoW) consensus algorithm, which means that miners search for new blocks and validate transactions on the blockchain. According to the ethereum.org platform, ETH is currently being issued at a rate of approximately 13,000 ETH per day as a reward to miners. That is how many new coins appear in circulation every day.

The official data on the expected issue of ETH before and after the merger

When the merger happens, the miners will be replaced by validators - instead of maintaining expensive mining equipment, they will validate the transactions based on the proof of ETH deposited into the altcoin smart contract. To become a validator, you need to deposit at least 32 ETH, or almost $55,000 at the current exchange rate.

The amount of Etherium in the cryptocurrency’s deposit smart contract

But that’s not all – after the merger, ETH issuance will drop to 1,600 ETH per day, which is about 90 percent. By comparison, halving Bitcoin in reduces the cryptocurrency’s supply by 50 per cent. Of course, BTC has already gone through several such procedures, but a supply reduction of as much as 90 percent is a huge shift in the market balance.

As such, experts believe that a sharp reduction in the cryptocurrency's new supply could have a positive effect on what is happening with the exchange rate. Again, such sounds logical, but in practice the situation could be completely unpredictable.

What will happen to ETH after PoS?

Generally, events that do not have a significant impact on the market can be factored into the price in advance. These include high-profile partnerships, protocol updates to some more or less well-known altcoins and so on. For now, however, it is doubtful that something like a merger could already be factored into the price of ETH. Many traders said back in 2020 that Bitcoin’s halving was supposedly “market-accounted for” back then, making it not worth waiting for the cryptocurrency to rise. However, we all remember now how Bitcoin made several new all-time highs as early as 2021.

So why might the merger still not be priced in by the market? For most investors, it is simply impossible or extremely difficult to determine what the future demand for ETH will be. It is determined by a number of factors, including the development and activity of the network. The number of users on the network determines how much ETH will be needed to pay commissions, what the revenue of validators will be, and so on.

Etherium ETH exchange rate chart for the last 90 days

It is also important to remember that after the transition to Proof-of-Stake, Etherium will go through a long series of upgrades, which will significantly reduce the cost of transactions and thus help attract millions of new users to the cryptocurrency.

In addition, Etherium creator Vitalik Buterin has previously stated that the blockchain’s transition to Proof-of-Stake has not yet been factored into the cryptocurrency’s price. He was referring to both the market component and the psychological one. PS: the video is having problems with the cover and needs to be clicked on to play.


We believe that the forthcoming update to Etherium may not be factored into the cryptocurrency's price. Firstly, Eth's move to PoS will only be the first step in a series of important updates to the blockchain, meaning there could be positives around the development of the network later. Secondly, the cryptocurrency market is currently in a bearish trend, so the same impending 90 per cent drop in ether issuance may not have affected the value of the asset as much as it would have during the growth phase. Be that as it may, over the long haul, all this is sure to have a noticeable impact on crypto-assets - and that includes in the context of mass adoption of digital coins. In addition, there will definitely be fewer reasons for environmentalists to criticise ETH.


Will you be buying Etherium? Share your thoughts on it in our Millionaire Crypto Chat. There we will discuss other important developments in the blockchain world.