The Ethereum blockchain is working towards transitioning from being a proof-of-work blockchain to using a proof-of-stake consensus mechanism. The merge, as the point at which this permanent change will happen is dubbed, is going to benefit Bitcoin as well according to a new analysis.
The Ethereum merge will decouple crypto from equities
In a report named “The Decoupling Thesis,” Messari’s senior research analyst Tom Dunleavy argues that the Ethereum merge will likely be a major turning point in the economic outlook of investors.
He notes that in the past, Bitcoin and Ethereum – the crypto market leaders – have had strong positive correlation with the broader US stock market. The correlation between the two cryptos and the Nasdaq and S&P 500 index has ranged from 40-50% for longer periods and around 90% for shorter periods.
In contrast, assets like gold and U.S. government bonds have historically been negatively correlated with stocks. At present, however, this negative correlation has been getting weaker. Both gold and bonds crashed along with stocks during the 2020 market downturn that was brought on by inflation.
Based on this trend, Dunleavy maintains that with inflation persisting, gold and bonds become less attractive. This is where staking Ethereum in a PoS system will work wonders for the market.
Trending Stories
Coinbase’s NFT Partner Secures $70 Million In Series B Funding
Altcoin News0x Labs Raises $70 Million; Sends ZRX Token To The Moon
Altcoin NewsNFT Sales Are Skyrocketing Despite A Crypto Market Crash, Here's Why
Altcoin NewsBitcoin (BTC) Price Trend Confirms Bullish Momentum, Here's Why
Altcoin NewsDogecoin Whale Activity Surges After Twitter Deal, Will DOGE Rise More?
Altcoin NewsPost merge, ETH is going to become a quasi-government bond. Stakers will put up capital in exchange for returns at a set schedule like a bond principal. This will also solidify Bitcoin’s position as digital gold.
A regime shift to a new environment with a higher persistent level of inflation makes bonds & gold less attractive. The Ethereum merge creates conditions for ETH as a quasi-government bond further solidifies the narrative for Bitcoin as digital gold, Dunleavy said.
The merge is also expected to usher in the “flippening”
Previously, Messari predicted that 2022 will see the broader crypto market decouple from global markets. The market intelligence provider noted that various sectors of the crypto market will continue to gain more traction.
While the Ethereum is highly anticipated to happen this year, there is no set date yet. However, the developers of Ethereum are reaching milestones on the journey to it.
Meanwhile, sentiments that the merge will push Ethereum above Bitcoin continue to persist. Speaking to Reuters, Noelle Acheson, head of market insights at Genesis Trading, opined that post-merge more funds will find their way to Ethereum.
On the day ETH is trading at around $2,850 with a market cap of $343.98 billion, while Bitcoin is trading at around $38,200 with a capitalization of $726.69 billion.
- Trending
- Price Analysis
- Why Ethereum Merge Is Expected To Skyrocket Not Just ETH?
- Coinbase’s NFT Partner Secures $70 Million In Series B Funding
- 0x Labs Raises $70 Million; Sends ZRX Token To The Moon
- NFT Sales Are Skyrocketing Despite A Crypto Market Crash, Here’s Why
- Bitcoin (BTC) Price Trend Confirms Bullish Momentum, Here’s Why
- Dogecoin Whale Activity Surges After Twitter Deal, Will DOGE Rise More?
- Terra’s DeFi Value Hits Record-High $21.8 Bln, What It Means For Luna:
- Why ApeCoin Prices Might Decline After Launch Of “Otherside”
- NEAR Token Rises On New Stablecoin Launch, Can It Rival Terra?
- April 2022 to See Record Cash Fleeing Crypto ETFs As Interest Wanes
- Solana Price Prediction: Is Current Consolidation in SOL Price Suspects Buying?
- Terra Price Prediction: LUNA Price Sinks 8%; Time To Rebound?
- CAKE Price Analysis: Double Top Pattern Fallout Teases 18% Fall In CAKE
- Graph Price Prediction: Range Breakout Hints GRT Price to Grow 18%
- Bitcoin Price Prediction: BTC Price Struggles Below $40,000; Is Sideways To Continue?
- Dogecoin Price Analysis: Inverted H&S Pattern May Raise DOGE To $28
- Aave Price Prediction: AAVE Price Looks For 17% Gains; Are You Buying?
- Ethereum Price Analysis: ETH Price Hovers Near $3,000; Buy or Hold?
- NEAR Price Analysis: Concentrated Support Stalls NEAR Price Correction
- Terra Price Analysis: LUNA Buyers Sabotage Bearish Pattern With Eyes on $100
- About author
- Disclaimer