Ethereum’s price has increased to $2,000, a new record high since May. After a string of gains, the price of the second most valuable cryptocurrency is up by 5%.
In particular, the price of Ether has been rising since the beginning of July. Since then, Ether’s price has increased by about 100% in just 40 days.
The long-awaited Merge Upgrade for Ethereum is now set to be live in September. Due to the Upgrade, the network will switch from the Proof-of-Work (PoW) protocol to the Proof-of-Stake (PoS) protocol.
The Price Increase of Ethereum Caused by the Merge Event
The recent increase in cost was caused by the impending Merge Upgrade, which will go live next month. At least until the Ethereum development team officially announces the Merge, optimism is expected to remain high.
Glassnode reports that ETH alternatives have finally surpassed BTCs in popularity on the network. Comparatively, the Open Interest in Bitcoin is only $4.8 billion, whereas the Open Interest in Ethereum is $6.6 billion. In reality, this is the result of large bets placed on call options by investors when news of the Merge launch was released.
In the wake of the successful completion of the Goerli testnet, investor optimism for the network reached a peak. The Upgrade will lessen the controversial platform scalability, such as excessive gas costs.
In addition, the dominant altcoin is attracting more attention as bullish investors anticipate a price increase. As the Merge nears, outflows from the exchange are decreasing and demand for the token is increasing.
Surprisingly, Bitcoin is losing popularity with investors who are instead showing a greater interest in trading asset futures. All signs point to open interest in Ethereum hitting a new record high, surpassing the previous peak established in November of last year.
The Merge has had a significant impact on the token’s performance, since most investors set high expectations for prices up to $2,500.
Will the Next Turn Be Dangerous for Investors?
The derivatives market data shows that Ethereum traders expected a price reduction after the Merge. After what has been a flawless start, analysts at Glassnode predict that this post-event will generate significant media attention.
According to the numbers, the Option Interest was overtaken by the September Merge mania when the price hit $2,200. Worth noticing is the precipitous drop in option demand one month after Merge timetable announcement.
This also alludes to the fact that traders are willing to exchange the downside for more great protection to hedge their positions. The upswing was swift and dramatic, but it didn’t last long. Experts say that following Merge, traders will use the “sell the news” strategy as a hedge.
Vitalik Buterin, one of the creators of Ethereum, has said that the team has not yet decided how much the Upgrade is worth. Now that Merge has occurred, all eyes are on the network’s response.
Mine workers are upset because they may lose their jobs as a result of the switch to PoS. The miners, meantime, are trying to replicate the ETH Proof-of-Work system by creating a fork. As public support for the proposed new fork diminishes, it will have a detrimental effect on the network and ultimately impair Ethereum’s success.