Confusion surrounding one of the most anticipated events in crypto history has caused the price of Ethereum (ETH) to surge, then crash, then surge again.
Ethereum’s token was up 7 per cent on Tuesday ahead of the first part of the Merge, which will see the cryptocurrency switch its underlying technology to one that is vastly more environmentally friendly.
The price bump followed a fortnight-long crash that appeared to be driven by fears that the transition could disrupt the network.
The dip was not enough, however, to wipe out the gains made since mid June, when Ethereum’s Merge-inspired price rally began.
Crypto market commentators warned that concerns about the move from a proof-of-work to a proof-of-stake system have been compounded by confusion surrounding what it actually is and when it will happen.
“Ethereum spiked, then fell, underlining the confusion over the Merge. By Sunday a substantial amount of ETH had moved back to exchanges, causing numerous pundits to call for the “sell the news” sell-off,” Dr Martin Hiesboeck, head of blockchain and crypto research at the exchange Uphold, told The Independent.
“While the price action of Ethereum certainly gives hope for the overall market to maybe turn a corner in the next few weeks, the sudden jump is mostly motivated by hype and perhaps a lack of understanding of what the Merge will actually do. Ethereum fans point to the Merge as the catalyst for the next bull run on ETH. We believe what happens to Ethereum doesn’t depend on the Merge but on what happens next.”
The merge is still expected to happen around Sep 13-15. What's happening today is the Bellatrix hard fork, which *prepares* the chain for the merge. Still important though - make sure to update your clients!
— vitalik.eth (@VitalikButerin) September 6, 2022
Despite beginning on Tuesday, 6 September, Ethereum’s Merge will not actually be completed until mid September, with Ethereum co-founder Vitalik Buterin predicting it will take place at some point between 13-15 September.
If carried out successfully, Ethereum is expected to cut its energy demands by more than 99 per cent, equivalent to the electricity consumption of Portugal.