With the potential to draw new users to the platform, the historic Merge upgrade raised expectations for Ethereum’s (ETH) future possibilities. However, because of the current market slump, Merge’s initial phases have fallen short of expectations, with the asset incurring capital outflow.
For instance, as of October 3, Ethereum’s market value was $158.23, down 19.22% from the $195.89 billion it had on September 15, when the Merge had been formally completed. According to data from CoinMarketCap, the asset has lost about $37.66 billion over the period.
Following the official switch of the network to the Proof-of-Stake (PoS) consensus from the Propd-of-Work (PoW) consensus, it was anticipated that The Merge would increase interest in Ethereum. Ethereum is intended to become a deflationary asset as a result of the update, which may also draw institutional investment.
Therefore, one of the signs that the Merge hasn’t had a significant influence on Ethereum is the capital outflow. However, supporters feel that while the upgrade is only a small portion of Ethereum’s larger roadmap, it will have a lasting impact.
Ethereum’s price, which has consistently fallen while battling to maintain levels of $1,300, reflects the capital outflows. At the time of publication, the asset’s price was $1,301.01, down more than 17% from the $1,590 it was on September 15th.
It’s also crucial to remember that following the Merge, several participants in the cryptocurrency market speculated that Ethereum would surpass Bitcoin (BTC) in terms of market value to serve as the ideal inflation hedge. The capital outflow, however, seems to cast doubt on this forecast.
The recent comments by the head of the US SEC that Ethereum ought to be treated as an American exchange as the majority of its nodes are there have increased the regulatory difficulties that Ethereum optimists must also contend with. Investors are also concerned about the possibility of the second-largest cryptocurrency in the world by market capitalization being classified as a security.