Experts Weigh in What the Merge Might Mean for Bitcoin

Bitcoin and Ethereum are correlated, and it’s expected for a major event like the Merge to impact both blockchains even if only one experienced the changes it brought.

Ethereum’s transition to a proof-of-stake protocol has overshadowed Bitcoin in the media for the last few months. The long-awaited transition brought drops in both Ethereum and Bitcoin prices. According to statistics, Ethereum’s price decreased by 13% while Bitcoin’s price dropped by 3%. However, some experts believe other factors also influence the price drop because a series of forces at work is pressuring digital currencies worldwide. 

This article should help us understand how Ethereum’s Merge will impact Bitcoin in the eyes of crypto investors.  

Bitcoin stands alone atop the cryptocurrency market. But will the Merge affect it?

Vitalik Buterin stated that the Merge would transition Ethereum from an energy-intensive consensus mechanism to a sustainable one. The upgrade is only one of the several improvements Ethereum developers plan to employ to create a reliable decentralised blockchain for the future of finance. The Merge alleviates the energy concerns surrounding the crypto sector and brings several benefits to the second most popular ecosystem. The proof-of-stake consensus requires validators to verify block transitions. The more tokens a user has associated with the ecosystem, the more likely they will be randomly picked as a network validator. 

The proof-of-stake consensus differs from the proof-of-work mechanism because it uses less energy to verify blocks. The proof-of-work method relies on computers to solve complex mathematical problems to mine coins. The high amount of energy consumed in the process is a major criticism of the consensus, which remains at the core of mining Bitcoin. 

Bitcoin might experience price pressures

Bitcoin reached its highest value in November 2021, but since then, challenging economic conditions have negatively impacted its price. Its current price continues to waver due to rough market conditions, and no one can predict what the future might hold for it. It’s hard to say if any kind of event or change in the market could help Bitcoin’s price bounce up to the historic $69,000. Market specialists think that the primordial currency would increase in value again only if the market experienced economic recovery or investors would get to a place where they would use digital currencies for daily purposes. 

At present, the increased volatility of the most popular cryptocurrencies worries most crypto investors, who criticise the fundamentals of Bitcoin (in the context of the Merge). Crypto investors are more likely to pressure Bitcoin to expand its use cases and develop solutions to improve its sustainability. 

Vitalik Buterin stated that Bitcoin’s consensus model concerns him because it requires a considerable amount of electricity, which is terrible for the environment and implies issuing hundreds of thousands of Ethereum and Bitcoin tokens annually. Considering that the Bitcoin supply is limited, the ecosystem will issue zero tokens at a certain point, and the amount of energy its mining requires will stop being an issue. But the blockchain will deal with another problem; it’ll have to ensure it maintains its security. 

Ethereum enthusiasts believe that the Merge could help Ethereum win the reliability debate because crypto investors want to benefit from long-term adaptation. The upgrade cut down the volume of proof-of-work to 23%, and mostly it belongs to Bitcoin. Since regulators are always searching for ways to control digital currencies, targeting the proof-of-work consensus is most likely the first move. Therefore, it’s not wrong to state that the amount of energy it consumes will remain Bitcoin’s Achilles heel. 

The Flippening

Ethereum felt the biggest impact of the Merge, but it successfully executed the upgrade. If the Merge had failed, it would have been catastrophic for the Ethereum community. However, the extensive amount of testing the network completed in the previous months has paved its path to success. 

The immediate impact of the Merge on Bitcoin and other cryptocurrencies is minimal. But investors should still research how to buy cryptocurrency in the post-Merge era. As for Ethereum’s relation to Bitcoin, specialists think that resultant value changes could be transient. Ethereum’s transition to the proof-of-stake consensus has been on the blockchain’s to-do list since the beginning. The method has been a very discussed subject in the community, and everyone was expecting it. Therefore, the ripple effect it could trigger has already been factored into crypto prices. 

Ethereum enthusiasts have often suggested that the second-most popular digital currency will surpass Bitcoin in market capitalisation one day, an event they named the Flippening. Many believe the Merge is the trigger that could bring this hypothetical change to life. However, market experts don’t think the Flippening is at hand because Bitcoin has established itself as the core digital asset of the crypto industry. The crypto market has proved to be a multi-chain ecosystem over the years, so the chances for the Flippening to happen are pretty small. 

The Bitcoin community has similar sentiments because it sees the coin as the internet’s base monetary layer. No matter how many upgrades the other digital assets experience, Bitcoin will survive and maintain its position. 

Crypto experts believe that the Flippening could be measured according to metrics other than market capitalisation. For example, Ethereum has around 9,500 nodes or computers in its blockchain network, while Bitcoin has over 15,000. Ethereum has a higher transaction volume, around 1 million daily transactions, while Bitcoin completed around 270,000 transactions in the same period. Other metrics like the number of crypto projects and active addresses on top of the networks could also be used to decide if the Flippening is achievable shortly. 

In some ways, Ethereum already dominates the crypto market, considering that it pulled the Merge and 70% of tokens are built on its blockchain. However, despite using the proof-of-work protocol, Bitcoin remains the number one digital token.