According to a material From Coindesk, Katie Talati, Director of Arca Research spoke about the bearish condition of the Ethereum price, which may be for a short period of time, and futures will likely return to trading higher after the Merge update. This is the usual market position, which reflects the time value of money. The Ethereum 2.0 Merge, scheduled to take place on September 15th, will combine Ethereum's current proof-of-work (PoW) blockchain with the Beacon proof-of-stake (PoS) chain that was launched in December 2020. The change is likely to reduce the supply of the cryptocurrency, giving the price an extra boost.
Katie Talati, Research Director at Arca said, “The current state of retracement reflects the general market view that ETH will fall after the merger, but this may be short-lived. We believe that the real appreciation of the ether price will happen after the merger, driven by the increase in ETH blocked staking/holding the chain.”
“We are experiencing a pullback as a result of investors buying spot ETH and shorting ETH futures to collect the expected ETH PoW airdrop at the time of the merger, essentially isolating downside risk. ETH price for the “free” dividend,” said Arca's Talati.
Commercial giant Cumberland says the merger will remove $40 million in mining sales from the market and lead to a 90% drop in annual emissions. Additionally, the annualized yield from staking, or locking in coins on the network, is projected to double to at least 8% from the current 4%, a jump that is likely to fuel staking and suck a considerable amount of ether from the market.
The move to PoS will require validators to stake a minimum number of coins to validate transactions in exchange for rewards. Under PoW mechanisms, miners solve a computational problem to verify transactions and tend to settle the received coins as rewards to fund their operations.
