Ethereum jumps over 9% as upcoming merge adds bullish cues

NEW DELHI (CoinChapter.com) — Ethereum’s upcoming merge with its beacon chain adds bullish tailwinds to the blockchain’s native token, Ether (ETH).

Kiln, the final public testnet before Ethereum transitions to a Proof-of-Stake (PoS) mechanism, went live earlier this week. The merge refers to deploying Ethereum’s current execution layer to the “consensus layer” of the Beacon chain, the network’s upcoming PoS blockchain.

The Kiln testnet is likely the last merge testnet before Ethereum upgrades the existing public testnets, Ethereum Foundation developers stated.

The migration to proof of stake would redirect block rewards from miners to stakers. Furthermore, the platform would cut block rewards from 12,800 ETH to 1,280 ETH. As a result, Ether’s annual inflation would fall to 0.43% annually from the current 4.3%.

The bull case for ETH into the merge explained

"Yearly inflation will go down from 4.3% to 0.43% the equivalent of three halvenings at once" https://t.co/OlTnofVT35

— FTX Access (@FTX_Access) March 15, 2022

The shift to the PoS mechanism also includes the EIP-1559 update, which introduced a burning mechanism for Ether in Aug 2021.

Combined with the decline in deflationary pressure, the merge would represent a ‘triple halving,’ reducing selling pressure by an estimated 90%, the equivalent of three Bitcoin halvings.

Also Read: Ethereum (ETH) bobbed at over $2.5K as hackers cleaned out 3M from Deus Finance.

Meanwhile, the amount of staked Ether crossed 10 million ETH, according to data from Ethereum’s Staking Launchpad. Users have staked more than 10.5 million ETH (worth roughly $28.4 billion at current prices) on the blockchain.

Ethereum’s entire market cap was around $27 billion roughly two years ago. Moreover, Ethereum’s migration to PoS would also make the blockchain more environment friendly, as the merge would reduce the network’s electrical consumption to <1% of its current usage.

Crypto Firms Bullish About The Merge

In addition to traders and investors, crypto-based firms are also turning bullish on Ethereum. For example, PinkSale Finance, a crypto launchpad that helps users launch new tokens, stated that Ethereum has potential and might move past Bitcoin in the next few years.

The upcoming merge is the biggest news in crypto at present. With the upgrade, Ethereum will have significant deflationary pressure, a lower environmental impact, faster transactions, and more scalable. We have always believed Ethereum is the future of crypto, and the merge is another step in that direction.

An executive from PinkSale Finance said

PinkSale Finance allows its users to launch new tokens without extensive coding knowledge. As a result, the crypto launchpad aims to bring crypto-based finance closer to the masses. Moreover, PinkSale also helps with the Initial Token Sale (ITO), listing, etc.

The crypto launchpad also offers a yield farming protocol that incentivizes users who choose PinkSale Finance to launch their tokens.

Descending Trendline Resistance

The Ethereum token started the week positively, gaining nearly 3% to start an upward rally that took its prices to challenge ETH’s descending trendline resistance. To recap, Ether has been moving below a negative sloping trendline resistance since Dec 2021.

The alpha altcoin has challenged the descending trendline six times but without success. As such, ETH would need to move above the descending trendline resistance for a sustained bull run.

Ether would first have to flip immediate resistance near its 50-day moving average (purple wave, 50-day MA) at $2,770, breaking above the trendline, before challenging resistance near $2,900. Finally, ETH’s 100-day MA (yellow wave) acts as resistance near $3,100.

The relative strength index for Ether is neutral, clocking 49.11 on the daily charts. In detail, the RSI measures the magnitude of recent price changes to analyze overbought or oversold conditions.

ETH MACD Paints A Bullish Crossover

Meanwhile, trend-based momentum oscillator MACD charted a bullish crossover for Ether. In detail, a bullish crossover occurs when the MACD line (difference between 12-day and 26-day EMA) moves above the MACD signal line (9-day EMA of MACD). As a result, traders often consider the pattern a buy signal.

Also Read: Ethereum rallies 11% as Goldman Sachs give clients access to new ETH Fund.

As a result, ETH prices could see further upside movement, resulting from buying action of traders who rely on MACD.

However, if the uptrend fails, ETH could break below immediate support at $2,600 to move to support near $2,480. Finally, a sustained sell-off could see support at $2,350 come into play. However, a fall to $2,350 would bring ETH to prices last seen in late Jan 2022.

At the time of writing, ETH was trading at $2,674, up 2.1% on the day.