As a catalyst in favor of Bitcoin (BTC), the Ethereum merger could act as a catalyst, according to Benjamin Cowen.
As he says, Ethereum’s transition from the Proof of Work (PoW) protocol to the Proof of Stake (PoS) protocol is expected to boost the capitalization of the first-class cryptocurrency.
And it explains: “Investors will withdraw funds from Ethereum and invest in Bitcoin, suggesting that the blockchain update could drive down the price of Ether, the native currency of the Ethereum blockchain, amid negative news related to the transition.”
This will be very helpful for BTC, the investor believes, as BTC’s dominance plummeted at the end of 2020 from around 73% to 41%. “I wouldn’t be surprised to see BTC dominance start to return to earlier levels, perhaps in September. The reason is that, in the context of a major event for Ethereum, it makes sense for investors to reallocate some of their portfolios in favour of bitcoin,” Cowen said, adding:
“The Ethereum merger could be delayed, as has happened many times over the years. He noted that not all members of the cryptocurrency community are happy with the transition. Miners who are used to the consensual PoW method will have to switch to alternative networks, such as Ethereum Classic.
Since these networks do not have the same market cap as Ethereum, they are riskier for miners.
Recently, a major Ethereum miner abandoned the transition to ETH 2.0 and announced the creation of a new minority ETH PoW network, a haven for those who want to escape Ethereum 2.0.”