Does the Merged Ethereum 2.0 Still Get A Chance to Outdo BTC Amidst the Crypto Decline?

More than two thousand years ago, Aristotle believed that the cosmos was made up of Five Classic Elements, one of which was the ether. In the 19th century, the physics community considered the ether to be a medium of transmission. However, the development of science has completely discarded the "ether theory", but with the rise of cryptocurrencies and blockchain, the term has returned to our vision.

It has been several months since Ethereum completed its long-awaited "Merge", a transition from proof-of-work (PoW) to the proof-of-stake (PoS) consensus mechanism on September 15, 2022, which represents the beginning of a new era for the network.

The Ethereum Merger was the result of a six-year effort and a major technology update. In particular, the completion of the PoW to PoS transition marks a shift in the business strategy, greatly reducing the impact on the environment, and making Ethereum a more attractive target for ESG organizations. Fazzaco's other article this week, "ESG Investing - A Promise to Sustainability or Just Another Label?", elaborated on ESG investing. Therefore, Fazzaco asks a question in this article: with the collapse of Celsius, Three Arrows, and FTX, will the merged Ethereum 2.0 still get a chance to see a turning point and outdo BTC amidst the crypto decline?

What Does A Merged Ethereum Merge Mean to the Crypto World?

Previously, the Ethereum blockchain, like the Bitcoin blockchain, operated on a Proof-of-Work architecture, which required mining. Since there had been a surge in crypto investing over the years, and Ethereum has evolved into a worldwide blockchain network with many use cases, the increased popularity resulted in scalability concerns and rising gas fees. As a result, the merger occurred.

Despite the fact that the Ether Merger has been promised for years, continuing technological hurdles have repeatedly postponed the date. After numerous delays, the Merge ultimately occurred in the early hours of September 15.

The Merge is expected to speed up transactions on the Ethereum network, reduce energy consumption, and the network's carbon impact. Consequently, some investors believe Ether will eventually eclipse Bitcoin. But the question is here, will things turn out just as planned for them?

Investors awoke to find the token's price at its lowest point since July 2022 in the first week following the Merger. More than a year ago, ETH reached $4,800 before falling back below $2,000. Price had fallen for a variety of reasons, including the Fed's decision to implement a series of aggressive interest rate hikes to battle inflation and investors' concerns about regulation.

The "Ethereum Killer" Solana Clobbered by FTX Crash

Both Ethereum and Solana are two popular blockchains that each have their own native cryptocurrencies - Ether (ETH) and Solana (SOL), respectively. The blockchains are very similar in how they’re constructed, but Solana is a project that was designed to improve upon Ethereum.

Specifically, Solana is a layer-1 Proof-of-Stake blockchain network that enables developers to create decentralized finance apps (DeFi) and non-fungible coins (NFTs). Solana blockchain initially entered the cryptocurrency world as a competitor to the Ethereum blockchain, promising large-scale transactions at a minimal cost. Solana is a strong competitor to Ethereum and is sometimes referred to as an Ethereum Killer. Avalanche (AVAX) and Cardano (ADA) were both named as potential ETH rivals (ADA).

However, Solana suffered big time from the Alameda/FTX fallout, for Alameda was a major shareholder in Sol. During the FTX issue, Alameda reportedly intended to sell its Sol holdings, putting additional selling pressure on Sol coin.

Uncertainty stalks the blockchain that's been dubbed the "Ethereum killer". This is certainly adds another edge for Ether to capture the market.

Surging Demand for Hedging Ether Price Risk Spawns New Products

Back in August, the world's leading derivatives marketplace CME Group, announced the launch of options on Ether futures to provide the crypto community with another important tool to gain access to and manage exposure to Ether. These new contracts deliver one Ether futures, sized at 50 Ether per contract, and based on the CME CF Ether-Dollar Reference Rate, which serves as a once-a-day reference rate of the U.S. dollar price of Ether.

Fidelity also planned to launch an Ethereum index, less than two years after it launched a similar fund for bitcoin.

Swissquote, Switzerland's online financial services bank, too, has launched Ethereum staking, expanding its crypto staking offerings.

Binance.US is getting rid of trading fees for Ether, expanding its zero-free program beyond just BTC.

Although exchanges seem to be starting to turn their attention to Ethereum, the collapse of Terra Labs and FTX ultimately destroyed investor confidence in 2022. There was no surge in demand at depressed price levels, with contagion fears leaving ETH and the broader crypto market in the deep red.

ETH vs. BTC, How Big is the Gap?

​As of this writing (February 3, 2023), the price of Ether (ETH) is trading around $1,644, ranking the second among all cryptocurrencies, behind Bitcoin (BTC), which is currently trading at $23,500.

In terms of market cap, that of BTC is about $453.6 billion so far, which is a well-deserved giant topping every other coin. The second-ranked ETH has a market cap of $201 billion, accounting for about 44% of the size of BTC. At the beginning of 2022, Fazzaco compared the market caps of cryptocurrencies in an article discussing the importance of crypto market cap​​: BTC was 740 billion, while ETH was 310 billion, and the latter was about 42% of the former. Little has changed, but as everyone knows the events that the crypto community experienced in the middle and end of that year. Uncertainty has always been a specter hanging over everyone. No matter how many upheavals that might turn the entire crypto industry upside down in the future are now hidden in the folds of time and space, everything can only be seen clearly after time irons it out.