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Risk Factors Ethereum Investors Need to Take care With Merge Event Ahead

4 Sep, 20222 min readEthereum
Risk Factors Ethereum Investors Need to Take care With Merge Event Ahead

The Ethereum Merge has been the crypto industry’s unicorn since its proposal, and it is officially scheduled for 16th September. It is an exciting event for the crypto community to revolutionize the crypto space and expand further. However, the Merge is not risk-free as investors may face a big deal during the Ethereum Merge. On the launch day, the Ethereum Merge may create panic, and investors should be aware of its risks.

Risk Factors Of The Ethereum Merge

Panic among traders and investors could stand out as a negative signal and send ether values plunging. Some experts suggest that even if the Ethereum Merge executes without a hitch, a proof-of-stake system can give threats to centralize cryptocurrency while compromising security. According to CoinMetrics, the threat will not be limited to transactions alone, citing a possible turmoil of Ethereum.

It should be noted that the ETH’s circulating supply has changed drastically over the years, and the issuance of EIP-1559 in August 2021 totally neutralized the past changes. So, ETH’s net issuance could drop to zero, resulting in sky-high transaction value on the Merge day.

PoW had a competitive advantage, and regarding this, the CoinMetrics report stated that the PoS mechanism might lead ETH’s value to a deflationary trend rather than PoW’s upward trend for the staking procedure.

CoinMetrics advised investors to halt transactions because the mempool may not follow the pressure. As a result, this could lead to price mismatch or reversals across ETH lending markets and Decentralized Exchanges (DEXes). However, the firm thinks that the Ethereum Merge was a vital point for Ethereum.

Necessary Steps Ahead of The Ethereum Merge

According to CoinMarketCap, Ethereum has declined by 1.7% over the last 24 hours. As the Ethereum Merge moves closer, it is expected that the price will drop further and may close near $1000 on the launch day. It is suggested that investors invest less with proper risk management as Ethereum can change its path anytime.

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