The price of Ethereum may show independent dynamics from other cryptocurrencies after the Merge, as staking will make the second largest cryptocurrency by capitalization similar to bonds or commodities. This is stated in the study Chainalysis.
The upcoming merger on September 15-16 will lead to the active growth of interest from institutional investors. They will be attracted by the expected yield of 10-15% per annum. The indicator will exceed the return on financial instruments such as bonds and commodities.
According to Chainalysis, the number of Ethereum institutional investors (with balances over $1M ETH equivalent) is “growing steadily” from less than 200 in January 2021 to ~1100 by August of this year.
The rise in the indicator after The Merge at a faster pace will confirm the hypothesis that institutional “really consider staking the second largest cryptocurrency by capitalization as a good profit strategy.”
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Experts also drew attention to the discrepancy between the price of Ethereum and its synthetic counterparts, which release the value locked in the smart contract.
“The Shanghai update (6-12 months after The Merge) will allow the asset to be withdrawn, which will provide more liquidity for players and make staking more attractive,” the report says.
Experts mentioned the rejection of non-environmentally friendly mining with a reduction in energy consumption by “more than 99%”. This will increase the comfort of investors aimed at complying with ESG standards.
Recall that Ethereum developers have activated the Bellatrix update. The upgrade is the last step before migrating the main network to the Proof-of-Stake (PoS) algorithm.
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Earlier, Glassnode analysts came to the conclusion that after the activation of The Merge, the Ethereum cryptocurrency is likely to become deflationary.
In April, former BitMEX CEO and co-founder Arthur Hayes predicted Ethereum to rise above $10,000 by the end of 2022. He also suggested that the asset would be treated like a commodity bond.