The Ethereum Merge has been the crypto industry’s unicorn since its proposal, and it is officially scheduled for 16th September. It is an exciting event for the crypto community to revolutionize the crypto space and expand further. However, the Merge is not risk-free as investors may face a big deal during the Ethereum Merge. On the launch day, the Ethereum Merge may create panic, and investors should be aware of its risks.
Ethereum Merge Risk Factors
Panic among traders and investors could turn out to be a negative sign and send Ether values falling. Some experts suggest that even if an Ethereum merge is executed without a hitch, a proof-of-stake system could pose a threat to centralized cryptocurrencies, compromising security. According to CoinMetrics, the threat will not be limited to just transactions, citing Ethereum’s potential volatility.
It should be noted that the ETH’s circulating supply has changed drastically over the years, and the issuance of EIP-1559 in August 2021 totally neutralized the past changes. So, ETH’s net issuance could drop to zero, resulting in sky-high transaction value on the Merge day.
PoW had a competitive advantage, and a CoinMetrics report about it states that the PoS mechanism could lead the value of ETH to a deflationary trend, rather than an upward trend for PoW.
CoinMetrics advised investors to halt transactions because the mempool may not follow the pressure. As a result, this could lead to price mismatch or reversals across ETH lending markets and Decentralized Exchanges (DEXes). However, the firm thinks that the Ethereum Merge was a vital point for Ethereum.
Necessary Steps Ahead of The Ethereum Merge
According to CoinMarketCap, Ethereum is down 1.7% in the last 24 hours. As the Ethereum merge draws closer, the price is expected to drop further and may close near $1000 on the launch day. It is suggested that investors invest less with proper risk management as Ethereum can change its course anytime.
