The long awaited Ethereum merge is here and what it means for the network; plus our weekly BTC and ETH analysis
- What Is the Ethereum Merge and Why Does It Matter?
- Bitcoin/USD – BTC Trading Near Resistance
What Is the Ethereum Merge and Why Does It Matter?
The long awaited Ethereum merge is scheduled to happen this week on September 15th, 2022 and will transition the Ethereum network from Proof of Work (PoW) to Proof of Stake (PoS) consensus. Under Proof of Work, miners confirm blocks by solving cryptographically complex computation problems which consume energy during the process. Under PoS there is no need to use massive amounts of energy on proof-of-work computations. Three major reasons the ETH network is switching to PoS is because it is more efficient due to using less energy than PoW, it enables scalability through sharding, and results in a more secure and decentralized network. The move to PoS has been delayed multiple times due to the technical complexity and the huge amount of money at risk. If the merge is successful, it is estimated that the switch will reduce Ethereum’s massive energy requirements by 99.9%. One additional topic worth noting is that Ethereum will continue to use EIP-1559 and the merge will not affect the current gas pricing model or lower gas fees.
Bitcoin/USD – BTC Trading Near Resistance
BTC Daily Chart
BTC Weekly Chart
At the time of writing, bitcoin is priced at $21.3k and has once again rejected from the diagonal trendline that has been resistance since the November 2021 ATH. Also, while price has not yet officially closed for the day, on a LTF basis (low time frame), price is currently trading back within the range started in June. If price does not bounce from this area and is accepted back within the range on a daily closing basis, I would consider that a bearish move.
Bitcoin Bull Scenario
Bitcoin maintains price over the range and breaks through the trendline. A break of the trendline and I would target $25k as the first level of resistance.
Bitcoin Bear Scenario
Bitcoin closes back within the range and I would target the $20k previous ATH or the range support just below the prior ATH at $18.9k.
ETH Daily Chart
ETH Weekly Chart
At the time of writing, Ethereum is trading at $1600, and has not quite reached the $1.8k resistance level but has rejected from the area due to Bitcoin pulling back on the lower time frames. With the upcoming ETH merge approaching, it is possible that there could still be another leg up of strength that might influence price to trade back near the $1.8k weekly level, but for now it seems bitcoin has the bigger influence on price direction. Ethereum is also trading under its diagonal trendline which has acted as resistance since the November 2021 ATH, so even if price were to break the $1.8k level it would still have another hurdle ahead around the $2k area.
Ethereum Bull Scenario
Ethereum maintains the 2017 cycle high level and breaks the $1.8k level.
Ethereum Bear Scenario
Ethereum loses the 2017 ATH level and the next area of support is located in the $700 – $900 region.