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The Merge’s PoS Switch to Likely Coincide With Crypto Bear Market End

With Ethereum’s The Merge now set to happen towards the end of 2022, top Chinese miner and the founder of crypto mining pool BTC.TOP, Jiang Zhuoer, has projected that the upgrade would likely coincide with the crypto market’s exiting of its bearish state.

Lead Ethereum developer, Vitalik Buterin, had last month noted at the ETH Shanghai Web 3.0 Developer Summit that the much-awaited upgrade – which had been delayed previously – could now happen in August (or either September or October should there be any potential risk).

However, Zhuoer expects The Merge to take place between October and December. And with an expected 80% to 90% reduction in Ether’s (ETH) production, which he says is equivalent to 2x to 3x of Bitcoin’s halving, in addition to the EIP-1559’s burning mechanism that is set to continue being active, Zhuoer believes The Merge will make ETH become the first real deflationary crypto asset. Deflationary assets have a fixed supply which reduces over time.

All eyes have been on The Merge across and beyond the crypto space to bring about Ethereum’s switch from the Proof of Work (PoW) to the Proof of Stake (PoS) consensus mechanism. The switch is quite significant as it will move the Ethereum network away from being mining-dependent based on the activity’s criticism of being unfriendly to the environment. Rather, staked capital in the form of ETH will now be used to validate transactions on the network through smart contracts. Also, the ETH that has so far been locked in the Ethereum Beacon chain since late 2020 will be unlocked shortly after the upgrade.

So far, since the EIP 1559 was coded and activated, more than 2.35 million ETH (worth over $8 billion) has been destroyed forever. This burning process is expected to continue as The Merge renders several components of the PoW irrelevant in a post-upgrade state following its discontinuation on the network. Other impacts to be expected is a minimized disruption to the network’s tooling and infrastructure as well as a ~1 second reduction of average block times.

Despite the slow start to the year for the crypto market, though, some experts still believe that the value of Ethereum’s native token is headed for a huge growth. Three experts project that the price of ETH is still expected to be in the $,4000 to over $12,000 range before the end of 2022.

The “endless token burning” and the switch to the PoS via The Merge combined with the total value locked in decentralized finance (DeFi) protocols – amounting to about $108 bln as at press time – “will blow up an amazing unrealized market cap for Ethereum,” Zhuoer notes in a tweet.

Most of the existing DeFi protocols run on the Ethereum network and use ETH as the base currency. This is in addition to  Ethereum positioning its utility as a software network that enables developers to build and power applications including NFTs.

While trying to establish a pattern, Zhuoer adds that the most recent bull market which supposedly ended on November 10, 2021 brought an end a 4-year cycle and indicates history history repeating itself. “According to this,” he states, “the bear market will end at the end of 2022, coinciding with the ETH’s switch to POS” and probably kickstart a bull run.

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