Ethereum Merge May Be Non-Starter For Bitcoin
Ethereum’s upcoming merger is one of the more anticipated cryptocurrency events this year, but what impact—if any—it will have on bitcoin remains to be seen.
Some crypto experts argue that while the merger is a potential catalyst for ether, which is the second largest digital currency, it is unlikely to be a needle puller for bitcoin. That doesn’t mean investors should just ignore exchange-traded funds like VanEck Bitcoin Strategy ETF (XBTF).
“Conversely, the immediate impact of the merger on Bitcoin is likely to be minimal. As for ether versus bitcoin, most experts seem to agree that any price movements are likely to be transitory. After all, Ethereum’s switch to proof-of -stake has been on the network’s to-do list from the start,” reported Frederick Munawa for CoinDesk.
XBTF is actively managed and has bitcoin futures. These characteristics can be useful in the current environment due to the fact that bitcoin is falling sharply this year, and if it quickly reverses course, as it has been known to do throughout history, XBTF can react to that upswing.
For better or for worse, XBTF’s methodology and structure means that the VanEck fund will not be very responsive to the Ethereum merger. It’s not a negative comment. In fact, some experts are still bullish on bitcoin.
“Joe Orsinivice president of research at Eagle Brook Advisors, also believes that bitcoin will remain the dominant store of value in the long term, despite a temporary performance bump in ether’s price after the merger,” according to CoinDesk.
For now, bitcoin is the largest digital currency by market capitalization, and ether is undoubtedly a solid second. The two assets stand out in the cryptocurrency space, and how the rivalry shakes out in the years ahead is likely to affect a number of ETFs, including XBTF.
“Bitcoin currently has about 15,000 nodes (computers in a blockchain network) while Ethereum has about 9,500 nodes. However, Ethereum has higher transaction volume (currently over 1 million daily transactions) compared to Bitcoin (about 270,000 daily transactions). Other calculations such as active addresses and the number of projects built on top of a network may also be appropriate ways to measure dominance, CoinDesk concluded.
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