Ethereum Records A Double-Digit Price Increase As The Merge Goes Live On Goerli

The altcoin leader, Ethereum, is seemingly preparing for the last days of its proof-of-work consensus algorithm life, as Goerli, the network’s third and final testnet, successfully switched over to a proof-of-stake (PoS) on August 10.

This is the final step in Ethereum’s preparations for migrating to PoS, as the Ropsten testnet already successfully transitioned to PoS in June, while the Sepolia testnet made a similar switch at the beginning of July.

As CryptoBrowser already reported, the Goerli testnet merge was announced at the end of July and happened in two phases. The first part was Bellatrix upgrade on August 4, which prepared the soil for the second step, called Paris. The second part of the Goerli merge was triggered on August 10 after the Terminal Total Difficulty (TTD) on the Goerli chain reached 10,790,000.

Paris pushed the execution layer of the testnet to transition to proof-of-stake, essentially merging the existing testnet with the Beacon chain validators were on. However, The Goerli testnet differs from both Ropsten and Sepolia since it was running on a proof of authority (PoA) consensus algorithm rather than on proof of work (PoW). Another major difference is that node operators were required to update both their consensus layer and execution layer clients at the same time rather than only one of the two.

Meanwhile, the Ethereum foundation stressed that now is the final chance for block validators to ensure they are operating normally before the long-awaited Ethereum 2.0 Merge event, which is scheduled to happen around September 19.

The Merge is slated to bring an end to the energy-intensive PoW Ethereum mining, making the network more scalable and 99% more environmentally friendly.

Ethereum prices soar

The news immediately brought Ethereum up both in market cap and trading volumes, with a weekly price increase almost hitting 20%. Currently, Ethereum is just 80 USD short of surpassing $2,000 – a sight not seen for the second-largest crypto to date since late May. Many experts are considering the PoS transition to give the crypto sector enough of a boost to successfully end the crypto bear market.

Source: CryptoBrowser

However, other cryptos and wider economic events may be what is driving the entire sector up. For instance, the July Consumer Price Index (CPI) report in the U.S. gave some breathing room for Bitcoin (BTC) investors, which pushed BTC prices up past $24,000 and even going to $25,000 in just a day.

Simon Peters, a crypto market analyst at social investing network eToro, commented on the recent news, stating that the Bitcoin upwards move was welcomed, but not drastic.

“Crypto has not sat idly by and has pushed higher on the news, albeit not to radically higher levels than in past days. Given crypto asset markets’ recent tight correlation with U.S. equities, this should come as no surprise. At the bottom of this is a change in the makeup of the market.” Peters added.

Stocks and indices are also rising

Meanwhile, the CPI data has seemingly pushed the tech-heavy Nasdaq and S&P 500 indices up nearly 3% and 2.1%, respectively. The reason for the investor interest is the confirmation that the Federal Reserve will hike interest rates by 50 basis points instead of a more aggressive 75 points that seemed the likelier option only a few days ago. This means inflation may now be less of a threat to the US economy.

Nevertheless, US crypto enthusiasts may find themselves in a tight situation as the US Securities and Exchange Commission is still investigating the largest US crypto exchange to date – Coinbase, over its token listing processes as well as its staking programs and yield-generating products. However, banking giants like Bank of America (BOA) and JPMorgan Chase remained positive about the future of the exchange, with BOA even maintaining its buy recommendation, saying it was well positioned to successfully navigate the crypto winter and take market share.