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Can Ethereum’s Merge-mania punch past 100-day SMA?

Cryptos are slipping at the start off August after enjoying a rip-roaring time last month.

Ether climbed by a stunning 70.3% in July, posting its largest single-month gain since January 2021, even though prices have been resisted at the 100-day simple moving average of late.

To be certain, the world’s second-largest crypto by market cap remains some 57% lower year to date, while also languishing 67.8% below its ATH (all-time high) on intraday prices, registered back in November.

Can Ether’s Merge-mania punch past 100-day SMA?

The recent gains in the world’s second-largest crypto by market cap appear to have been driven by the hype surrounding Ethereum’s highly-anticipated upgrade.

Back in our June 14th report, we highlighted that this event as a near-term event to look out for, called “the Merge”.


What is “the Merge”?

Essentially, this upgrade moves Ethereum from a “Proof of Work” system to “Proof of Stake”.

  • “Proof of Work” is its current system which employs a lot of computing power by miners to solve complex math equations in order to track and validate transactions done via the Ethereum network. That massive usage of computers in turn requires a tremendous amount of energy consumption, which has been a lightning rod for criticism that the existing Ethereum system is not scalable nor sustainable.
  • Enter the new system ak.a. “Proof of Stake” which uses Ether tokens that are “staked” (set aside) to order those transactions. This promises to be a somewhat greener alternative and, more importantly for the crypto world, makes the network more scalable and more viable over the long term.

In fewer words, the “upgraded” Ethereum is looking to ditch “miners” for a more energy-efficient approach. According to Ethereum.org, “the Merge” is set to drastically slash Etherum’s energy consumption by 99.95%!

NOTE: Strictly speaking, Ethereum refers to the blockchain network which is the most widely used in the world; Ether is the native token on said network. However, both “Ether” and ”Ethereum” are often used interchangeably.

And the day for “the Merge” is drawing nigh; it could even happen by September (though to be clear, it’s been pushed back many times, though tests have been ongoing for years).

And if the mania holds, that should translate into support for Ether prices in the interim.


Ether: king of the crypto world?

Ether fans are hoping that once “the Merge” happens, this token could ultimately overtake Bitcoin and become the world’s largest crypto by market cap – an event dubbed as the “flippening”!

According to CoinGecko, Bitcoin’s market cap of US$438.2 billion is more than double Etherum’s of US$190.8 billion. The latter would have to outpace the former’s performance by 1.3 times in order to lay claim to the title as “world’s largest crypto”.

Ultimately, as recent past has proven, cryptos remain beholden to broader sways in the market.

If risk assets can keep rallying, based on the narrative that the Fed will be forced into easing up on its aggressive rate hikes for fears of sending the US economy into a “real” recession, that could see more upside for Ethereum and other cryptos.


Ethereum: Support and Resistance levels

Going back to the price chart, Ether’s immediate resistance level can be seen around:

  • $1717 – where its 100-day simple moving average (SMA) currently lies
  • After that, a wide region of resistance can be seen from the low-$1700s to the low-$2000s, judging by Ether’s May-June price range.

To the downside:

  •  if the lower upward trendline gives way as an immediate support level, prices may then test support at its latest cycle low around the mid-$1300s
  • followed by its 50-day SMA around $1290
  • Further below, the “twin peaks” below $1280 may then offer stronger support
  • Then, the psychologically-important $1000 line having rebuffed Ether bears since June.

Ultimately, sustained gains for Ethereum requires that the mania surrounding “the Merge” doesn’t dissipate in a “sell the fact” event, while broader market sentiment has to remain conducive for risk-taking activities.



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