Ethereum, the second-largest cryptocurrency by market capitalization, rose 45 percent last week, outperforming most other beatable assets. This could have a simple explanation:

As Ethereum’s development team nears the end of a multi-year, highly challenging upgrade, traders are turning bullish.

Surge in Ethereum

ETHEREUM, the second-largest cryptocurrency by market capitalization, has risen by approximately 45 percent in the last week, outperforming the remaining top 100 crypto assets. While other explanations are driving ETH’s upward trend, the approaching Ethereum merger is one of the primary drivers of price changes.

As developers near the end of a multiyear, highly arduous upgrade, ETH trading has shifted from pessimistic to positive. With the enormous social expectation of the Merge, the profit margin on the entire ETH supply has now increased to 56 percent, up from a low of 41 percent just before the current price boom.

According to Glassnode data, Ethereum’s 22 percent increase this week was due to a substantial clearing out of short bets in the futures market. Because the final activities that will genuinely shift Ethereum activity to the Beacon Chain are due in September, The Merge has plenty of time.

In a Tweet, Superphiz.eth, an Ethereum instructor, stated that Goerli would be the last public testnet to merge around August 11. If everything with Goerli goes as planned, the mainnet Merge is expected to go live during the week of September 19.

Opinions of Experts on ETH Price Action

According to Youwei Yang, director of financial analytics at StoneX, Ethereum’s surge is due to two “certainties.” The first is the recently stated schedule for the Ethereum “merge” update, which should dramatically improve the network’s energy efficiency. Yang claims that the second is the “calming” of macroeconomic concerns.

“If you look at the price movement tick by tick, this time it’s more like ETH leading BTC [or Bitcoin] rather than the other way around,” Yang remarked, referring to post-merge Ethereum. Nathaniel Whittemore, a well-known podcaster and industry watcher, made this claim in his most recent episode of “The Breakdown.”

Impact of “the Merge” on Ethereum Price

There is a rising awareness that “the Merge” may impact markets on Twitter, Discord, and anywhere else people discuss cryptocurrencies. However, after months of low prices, the occurrence implies a “return of optimism” in the cryptocurrency markets, as Whittemore put it. The Merge also fills a “narrative hole,” allowing crypto aficionados to share their experiences of how this technology is transforming the world with others.

Others argue that the Merge is causing the ETH price to rise for structural reasons. The upgrade marks a fundamental shift in Ethereum’s possible applications by rewarding investors who stake their assets in the network.

The move could result in Bitcoin-like deflationary effects that reward holders even more. In this case, people purchasing ETH in preparation may see it as more of an investment than a transaction.