If you feel swept up in all the hype surrounding Ethereum’s impending upgrade, you aren’t alone.
Google searches for “Ethereum merge” have seen an uptick over the past 12 months, recently hitting a peak.
Along with all the interest, Ether’s price has seen a boost as well. It hit a two-and-a-half month high this morning when it neared $3,350. It’s currently trading at around $3,406, up 6% in the last 24 hours, and almost 19% in the last week.
Why all the hype? Investors might be experiencing a bit of FOMO, or fear of missing out, Ilan Solot, a partner at the Tagus Capital Multi-Strategy Fund, a blockchain-focused venture capital fund, told CoinDesk.
“FOMO is kicking for ETH pre-merge.”
So, is the FOMO warranted? Maybe a little bit.
After all, the merge is “a really big deal,” Matt Hougan, Bitwise Asset Management chief investment officer, told Fortune. “The market will be pricing this change in for months. If the merge is successful, ETH will be one of the most popular crypto assets for institutional investors for the foreseeable future.”
Here’s what’s driving all the feels.
But why all the FOMO?
Ethereum currently relies on what’s known as proof-of-work, in which miners must complete complex puzzles to validate transactions and create new coins. This process requires a huge amount of computer power, and is often criticized due to its environmental impact.
With the planned upgrade, Ethereum is moving to proof-of-stake, which would let users validate transactions according to how many coins they contribute, or “stake.”
If it happens as planned, the merge would be an important milestone for several reasons.
For one, crypto mining on Ethereum would become obsolete, which would reduce the blockchain’s environmental impact substantially. The supply of Ether after the merge would also likely begin to decline, because fewer coins are expected to be issued post-merge, thereby increasing scarcity and price. Blockchain security against potential attack will supposedly improve. And because of all the aforementioned upgrades, institutional investment in the Ethereum network is expected to increase.
Though there’s no official timeline for the merge yet, some predict it might happen this summer.
All of this has translated into a boost in Ether’s price, which is reflected in its current jump.
“I think ETH’s strong performance recently is due in part to anticipation of the merge,” Hougan said.
Lots of hope, but still a risk
An increase in mainstream media attention surrounding the merge may also be contributing to the hype, and subsequent FOMO.
“I think non-crypto natives are becoming aware of the merge for the first time. There really wasn’t much discussion of the merge outside of crypto channels until a few weeks ago,” he said. “Now that the mainstream media is picking up on it, and institutional investors are hearing about it, people are realizing what a big deal it is.”
While the potential for the merge to complete successfully is cause for “understandable excitement, it’s worth noting, of course, that it’s not without risk: It’s a very high stakes technological upgrade, and there are risks it could be delayed or there could be issues in the implementation,” Hougan said.
