Independent research firm FSInsight says Ethereum will overtake Bitcoin in the next 12 months. The firm’s forecasts predict that after the long-awaited “merge” update, the balances in the altcoin market will change.
Ethereum will surpass Bitcoin by market cap in a year
The research firm predicts that the daily selling pressure and ETH issuance rate will decrease if the planned consolidation of Ethereum takes place. According to new analysis by FSInsight, Ethereum’s PoS transition will reduce both the token supply and the selling pressure from miners. Thus, it will give Ethereum a strong opportunity to surpass Bitcoin. Firm analysts expect this to happen for the next 12 months.
According to the research group, once the merger, also known as a merge, ends, “the supply inflation rate will drop” and the selling pressure from miners will “freeze at zero”. According to CMC data, Bitcoin’s market cap is currently roughly $456 billion. On the other hand, Ethereum has a market cap of around $230 billion.
Misconceptions about Merge
There is a common misconception that advanced Ethereum scaling will be enabled via PoS verification. However, this is not true. Because, according to the article, the base layer of Blockchain will continue to be quite costly. According to FSInsight director Sean Farell, the key goals are to get more people involved in block production. In addition, reducing energy use by 99.9%. The first of five planned upgrades for the transition from PoW to PoS is expected in September.
Investors looking to reduce their risk exposure after the merge is complete are likely to put some selling pressure on the secondary market. However, FSInsight noted that as the network settles, “flow imbalances from a deflationary supply have the potential to be incredibly constructive. The report went on to say that “merge-adjacent” names such as Lido (LDO), Rocket Pool (RPL), Optimism (OP) and Polygon (MATIC) are attractive options for “high beta” exposure to the process.
The leading altcoin is preparing for a merge, problems have arisen in related protocols
Crypto investors are eagerly awaiting the merge, Ethereum’s long-awaited technology upgrade. Most investors expect the event to go smoothly. However, the price of a popular ethereum (ETH) derivative token known as stETH has been on the decline before the update. According to Enigma, instability begins between stETH, which represents ETH locked in the Lido protocol, and ETH price.
Enigma’s pricing model treats stETH as a 1 ETH bond with an annual yield of 4%. If the merge is successful, an investor who buys stETH will receive 1.04 ETH per year. According to Enigma’s estimates, with stETH currently changing hands at 0.973 ETH, the price means only a 93.5-93.75% chance for the merge to happen smoothly and on time. This percentage is lower than many market watchers expected because all the dress rehearsals went well. “The market has high confidence in the merger,” says Enigma Securities analyst John Freyermuth. The expert then added the following to his explanations:
However, until this risk premium narrows to match the stake return, the stETH price supports the view that the merge is not priced in.
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