Ethereum's Growing Popularity: Overtaking Bitcoin

The narrative surrounding Ethereum suggests that it might soon surpass Bitcoin in market relevance. This potential "flippening" is gaining traction, as many investors increasingly recognize Ethereum's capabilities.

Section 1.1: The Positive Outlook of the Merge

Tom Dunleavy, a senior research analyst at Messari, posits that the Ethereum Merge could serve as a pivotal moment for investors' economic perspectives. Historically, Bitcoin and Ethereum have shown a strong positive correlation with the broader U.S. equity market. This correlation has ranged from 40% to 50% over longer durations and has been as high as 90% in shorter spans.

Conversely, assets like gold and U.S. government bonds have traditionally had a negative relationship with equities, although that trend is beginning to weaken. Dunleavy notes that during the 2020 market downturn, both gold and bonds suffered losses alongside stocks.

Brendan Playford, founder and CEO of Masa Finance, remarked that while the timeline for Ethereum's adoption continues to evolve, the complexity of the transition to a PoS system could lead to further delays, raising questions about its ability to fulfill promises of cost reduction and enhanced transaction speeds.

Video: Bitcoin falls 13% in August, and how the Merge will cut Ethereum's energy use - YouTube

Messari forecasts that the cryptocurrency sector will begin to decouple from traditional global markets by 2022. As this shift occurs, some experts speculate that the Merge may propel Ether ahead of Bitcoin, with Noelle Acheson from Genesis Trading noting a potential influx of capital into Ethereum post-Merge.

Section 1.2: Urgency Surrounding the Merge

Van Loon highlighted the urgency to complete the Merge ahead of the "difficulty bomb," a mechanism designed to increase mining difficulty on the network. This bomb, created in 2016, aims to expedite the transition to PoS by making PoW increasingly challenging.

Justin Drake, another Ethereum developer, emphasized the necessity for a swift transition to avoid complications caused by this mechanism.

Video: ETHEREUM MERGE - The Most Anticipated Event In Crypto Explained - YouTube

The initial timeline for "The Merge" was set for June 2022, but it faced delays. According to Tim Beiko, an Ethereum developer, prompt action is required to prevent complications. A crucial test, referred to as a "test milestone," is planned for June 8 to simulate the merger's effects. If successful, the next major step on the Ethereum roadmap will be the Sharded Chain upgrade, anticipated for early 2023.