Leading altcoin Ethereum (ETH) has made the long-awaited big update Merge. Thus, Blockchain has officially made its transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus algorithm. However, JPMorgan voices doubts about the post-Merge future of Ethereum.
Issue #1 for the leading altcoin: Risk of community split
JPMorgan Chase, a New York-based multinational investment bank and financial services holding company, has released a research note after Merge listing all the potential problems it sees in the Ethereum Blockchain.
In this context, the bank’s primary concern is the new Blockchain named EthereumPoW (ETHW) produced after the Hard Fork. JPMorgan points out that Merge is likely to cause a rift in the Ethereum community, given the divided support between crypto exchanges and platforms.
The second problem: Decentralization is declining
Second in the JPMorgan report, it voices Merge’s concerns that it is leading to less decentralization of the Ethereum Blockchain. Because only a few organizations command the majority share of staked ETH.
Third problem for altcoin: Price drop
On top of that, the agency’s report also highlights the sharp drop in Ethereum’s price. He notes that it is due to a combination of ‘buy the rumor/sell the news’ flows specific to Ethereum’s Merge event and general weakness in risk assets.
Indeed, since Sept. 15, when Merge took place, the price of Ethereum has dropped by around 20% so far. Currently, the decentralized finance (DeFi) token is changing hands at $1,303, shedding 1.23% on the day, according to data from CoinMarketCap. However, it still saw a 11.78% drop over the previous seven days.
Ethereum 1-week price chart / Source: CoinMarketCapEthereum futures trading volume drops
Additionally, the JPMorgan report notes that a “backward” move in the futures market is “a manifestation of a more bearish shift in crypto markets in recent weeks.” As cryptokoin.com previously reported, total trading of ETH and BTC futures on the Chicago Mercantile Exchange (CME) recorded its lowest volumes since December 2020. Ethereum futures volume fell 17.4% in August compared to July 2022 to $8.99 billion.
Meanwhile, JPMorgan’s CEO, Jamie Dimon, is critical of Bitcoin (BTC) and cryptocurrencies in general. Addressing US lawmakers, he describes them as ‘decentralized Ponzi schemes’.
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