Ethereumhighly anticipated after Merge in shapellaThe upgrade will take place at midnight on April 13.
We started a good day in terms of cryptos. Bitcoin rose to $ 30,430 in the morning, accompanied by purchases from Asia, testing the top of the last 10 months. Volatility increased in line with expectations, ahead of the inflation data we will receive from the US on Wednesday and the FOMC. In addition to macroeconomic developments Ethereumhighly anticipated after Merge in shapellaThe upgrade will take place at midnight on April 13.
This upgrade, which is scheduled to take place at midnight on Wednesday, will unlock 17 million Ethereums with a market capitalization of approximately $32 billion. It is thought that the possibility that the staked Ether may be sold after the upgrade may create selling pressure on the price. On the contrary, there are also investors who think that ETH volatility has been on the decline for the last two weeks, so that investors are not in a risky situation.
To briefly talk about the update adventure of Ethereum; When Ethereum was founded in 2015, it was working with Proof of Work just like Bitcoin mechanism. It was produced as an alternative to Bitcoin, but it also had differences such as not being limited in supply, being able to write smart contracts on it, and having a unique network. With the developments in the digital asset sector, new cryptocurrencies were in the market with the proof of stake we called Proof of Stake, while Ethereum was lagging behind all this technology.
In Proof of Work (PoW), transactions on the network were validated by miners and rewards were awarded to verified miners. Mathematical puzzles solved with hardware devices not only consumed a lot of energy, but also caused mining companies to experience high cost problems. Mining during the bull season seems like a good option, but in the current bear season, it causes companies to incur huge losses and even go bankrupt.
The Ethereum Foundation, accompanied by Vitalik Buterin, the founder of Ethereum, gave the good news that they wanted to change the system and that there would be many innovations, and they made announcements about it. Finally, like the newly launched projects in December 2020, Ethereum was introduced with the opportunity to stake Ether with a Proof of Stake proof of stake. Thus, miners who play a role in issuing a digital asset have now been replaced by validators, that is, those who lock their assets.
In addition to staking, an EIP 1559 application was carried out and the burning of Ethers in circulation took place. With the burning of Ethereum, some Ether in circulation was sent to an irreversible wallet and removed from circulation.
While all these processes continue, the work of Ethereum Merge, which is a big step for the digital asset ecosystem, has started and the official transition to the Ethereum Proof of Stake consensus has been completed on September 15, 2022. With Ethereum 2.0, which was successfully realized last year, issues such as less energy consumption, scalability and increased staking demand in Ethereum were targeted. At the same time, Etherem’s inflation rate was intended to be lower than Bitcoin’s. In the Ethereum network, which attracted the attention of institutional investors especially after Merge, four testnets were successfully completed and no problems were encountered. In fact, the Foundation announced that until April 5th, it will distribute a reward to anyone who finds any flaws in the system. Merge is designed to make the network more efficient, sustainable, inclusive and environmentally friendly. Contrary to expectations, transaction fees did not drop immediately after the merger, but the network’s energy use is expected to decrease by over 99 percent.
With the announcement in December 2020, users staked their Ether. However, there was no date for when the locked Ethers would be unlocked. To relate this to an example, let’s say we staked 32 Ethers received at $650 in December 2020. While the transaction cost was equivalent to an average of $ 21,000, a year later, Ethereum rose to $ 4850 with the ATH level. When we collected these arguments, users took this risk and could not realize profit from ATH level. Since the limit on the staking rate is a maximum of 32 Ether, the risk ratio became difficult and Ethereum staking remained weak compared to other cryptocurrencies. However, the users who staked Ethereum were people who believed in Ethereum’s vision. After the announcement from the Ethereum Foundation at the beginning of the year, it was announced that the locked ones will be released after the Shapella update.
Users will be able to receive their staked Ether and staking rewards after upgrade. As a result, circulating Ether is expected to decrease and annual token issuance is expected to decrease by 90%. With the contribution of the EIP 1559 protocol, Ethereum will turn into a deflationary asset. Currently, approximately 18 million Ethereums are locked. Despite potential sell-offs and dips after the upgrade is complete, market anxiety remains.
What Will Happen After Shapella?
After the update, the limit on staked Ether assets is planned to be reduced from 32 to 16 Ether. Apart from this, studies are continuing to become a validator with a minimum of 1 Ether. We believe that Ether will increase digital asset staking rates as a new order replaces completely uncertain unlock times.
ETH/USDT Technical Analysis
Before the Merge update, which took place on September 15 last year, Ethereum had risen to the $ 2030 band. However, the declines that came with the macroeconomic developments suppressed the Ethereum rises. If we focus on the period ahead, it broke our horizontal position upwards by visiting the $1900 band last week and today. By staying above the $1850 resistance area that it tested in the past few weeks, it turned that area into support. If it protects our pivot point of $ 1850, it will be possible to see a move towards the $ 2000 band. However, it can be predicted that the data we will receive from the USA will continue to be above the 1600 dollar band. Although Ether is gaining momentum right now, it is clear that the market is focused on US inflation and the FOMC. We can think that if the 28.500-28.700 channel is preserved in Bitcoin, it will also support Ethereum.
This update may create a buy-sell opportunity for short-term investors. We can create selling pressure on the price due to Ethers that have been locked for a long time, and we can perceive this as an opportunity. While the first week after the upgrade remains important, it is a matter of curiosity whether the prizes and the locked Ether will be sold. In order to fully observe the rises in cryptos, the USA’s getting rid of the inflationary environment and increasing the risk appetite of investors play an important role.
