The shift of the Ethereum blockchain from its present proof-of-work (PoW) mining consensus to a proof-of-stake (PoS) mining consensus is expected to be one of the most significant changes since its conception.
The penultimate test net merging before the changeover is slated for Sept. 15, following the successful Goerli test net integration. The native token, Ether (ETH), had a positive rise following the announcement of the Merge date in July. The price of ETH increased to a six-month high of more than $2,000 but could not consolidate the critical resistance.
As the Merge draws closer, the optimistic fervour in the token price and market sentiment appears to be waning. The holdings of a sizeable portion of ETH whales have sharply decreased.
Data from crypto analytic firm Santiment indicates that the gap between Ethereum’s top-10 most extensive non-exchange addresses and exchange addresses is closing. Over the past three months, top whale addresses have sent a significant amount of ETH onto exchanges as non-exchange addresses saw a decline of 11%, while exchange-based talks have seen a 78% surge.
The flow of crypto onto exchanges is considered a bearish sentiment and is often done by traders to make a profit by selling their tokens. The increase in the amount of ETH by whale addresses on exchanges suggests these whales are expecting the price to go lower shortly.
Many market analysts also believe that the Merge would be a “buy the rumour, sell the news” type of event. Where the market rallied in the aftermath of the Merge date confirmation but could eventually see a price decline after the critical event. The saying means that if good news is expected sometime in the future, the price will often move higher in anticipation of that date, but not necessarily after.
The Merge would mark the completion of the second of three phases in Ethereum’s transition to the PoS consensus. The PoS transition process began in December 2020 with the launch of the Beacon chain.
The current phase was scheduled to be completed by mid-2021. However, due to several delays, it is now slated for the third quarter of 2022. The third phase would be the most crucial as it would introduce several scalability features such as sharding and reducing blockchain’s energy consumption significantly.
The Sept. 15 event is a significant milestone for Ethereum. However, at the same time, the Merge would only mean a change in mining consensus. Key benefits such as high transaction capacity, lower gas fees and reduction in energy consumption would all come after the completion of the third phase.