Bankless: Plunge after merger completes, has Ethereum been priced in?
Author: Lucas Campbell
Original compilation: aididiaojp.eth, Foresight News
Author: Lucas Campbell
Original compilation: aididiaojp.eth, Foresight News
Last week, Ethereum completed the historical process of merging.
In the entire history of encryption, this is a landmark event. ETH is massively deflationary, the network is greener, and stakers are starting to get “real” benefits.
After the merger, many people wonder whether the potential benefits of the merger have been reflected in the price of ETH?
If we go back in history, we can see that there have been five major supply shocks in BTC and ETH in the history of crypto:
EIP-1559
3 Bitcoin Halvings (2012, 2016, 2020)
Ethereum Beacon Chain
When these events occur, the potential impact of none of them is directly reflected in the price. Clearly, the impact of the merger hasn't really acted as a catalyst yet.historical footageCooper Turley and I wrote an article called "
Bitcoin Halving: Price Effects and Historical Correlation
"The article, this article analyzes in detail the impact on the price before and after each bitcoin halving:
Bitcoin hits all-time high 12 to 18 months after halving
The duration of each cycle is extended
The increase in each cycle is decreasing
Of course, we only have three halving data. Given the small sample size, this is also a relatively subjective guess.
Now we can fill in the data for the third halving and find:
Bitcoin hits all-time high just 18 months after halving
The period is slightly extended
The cycle increase is decreasing
So when the Bitcoin halving just happened, the impact of the halving was not directly reflected in the price. In anticipation of a reduction in supply in the crypto market, the price would rise slightly ahead of time, and then the asset would go up parabolicly a few months later as the daily selling pressure from miners diminished.
First halving: November 28, 2011
Second halving: July 9, 2016
Third halving: May 11, 2020
Now we focus on Ethereum
Bitcoin halving occurs every four years is the most common consensus in the encryption market, and everyone knows its future.
While everyone knows that market selling pressure halves every four years or so, pricing assets in the crypto market is dynamic in terms of supply and demand. Or the inability of crypto markets to directly price the simplest and most famous supply shocks.
And when we focus on Ethereum, we find that it is even more unpredictable that Ethereum is affected by supply and demand. The Ethereum upgrade route is not directly written in the smart contract, but depends on the actual progress of the developers.
Regardless, over the past two years, as Ethereum has progressed towards its fully envisioned direction, we can see three important factors affecting changes in supply and demand for Ethereum: the launch of the beacon chain, EIP-1559, and the recent merger.beacon chain。
beacon chain on
EIP-1559
Launched on November 4, 2020At the opening of the beacon chain deposit contract, the ETH price was $450. Its price climbed to over $4,000 in seven months as more than 5 million ETH was locked in the new PoS chain. Overall, the increase from beacon chain launch to cycle peak was 760%.After launching the mainnet in July
merge
, ETH price started a new round of climbing. After the official implementation of EIP, the price of ETH hit a record high again after more than 3 months. During this period, more than 1 million ETH were destroyed.
merge
Like all Bitcoin halvings, the Beacon Chain, and EIP-1559, consolidation is another major factor affecting cryptoasset supply and demand.
Now that we're facing an unpredictable future, the merger is complete, but a mystery lies ahead. ETH dropped below $1,400 this weekend, and judging by the data, this could be attributed to miners dumping their ETH and another potential rate hike from the Federal Reserve this week.
image description
source
Miner dumping of ETH is happening and likely to continue for several months. But there was a bigger crisis.
Macro environment
The macro environment has greater uncertainty:
Fed hikes interest rates aggressively (75 bps expected this week)
U.S.-China tensions escalate over Taiwan
summary
If the macro environment does not improve, then supply and demand movements become less important.
summary
What needs extra vigilance now is that the world is facing huge uncertainties, and investors are also facing tests. But unless a global crisis breaks out, the price of Ethereum will hit new highs in the next 12 to 18 months.
