The Bitcoin (CRYPTO: BTC) price has edged up 1% over the past 24 hours, currently trading for US$19,548 (AU$29,062).
The world’s top crypto has been overshadowed in the media in recent weeks by the second biggest token in virtual circulation, Ethereum (CRYPTO: ETH).
That’s because Ethereum finally underwent its long-awaited merge last Thursday. The process sees the token transition from proof of work (PoW) to proof of stake (PoS). PoS requires far fewer computers to maintain the blockchain security and cuts energy use by more than 99%.
The Ethereum price is down some 13% since the day the merge went fully active, while the Bitcoin price has dropped 3%, according to data from CoinMarketCap. But there’ve been other short-term forces at work pressuring cryptos and risk assets more broadly. Namely the prospect of further aggressive tightening from the world’s top central banks.
As for the longer-term potential impacts of the merge on the Ethereum price, we explored that here.
But will the Ethereum merge also impact the Bitcoin price in the eyes of investors over the long term?
For some insight into that question, we defer to head of marketing at CoinSpot Ray Brown.
How might the merge affect the Bitcoin price?
“Ethereum has long been the ‘number two’ cryptocurrency in terms of value and cultural relevance, with Bitcoin synonymous with cryptocurrency as a whole,” Brown said.
As for whether Bitcoin remains number one, Brown said that will depend somewhat on the success of the new proof of stake protocol used across such a massive network:
It remains to be seen whether the merge will have any real impact on Bitcoin’s dominance in the long term. If the merge proves to be completely successful, an increased popularity of proof-of-stake chains could rattle Bitcoin’s dominance, as the leading crypto is effectively married to a proof-of-work protocol, which many are already hypothesising could grow more unpopular as demand for less energy-intensive solutions intensifies.
The Bitcoin price might also lose ground to its rival should the merge prove to drive greater interest in Ethereum’s smart contract solutions.
According to Brown:
The increased versatility of Ethereum could also work significantly in its favour over Bitcoin. And if Ethereum’s utility as a smart contract provider gains further traction thanks to higher efficiencies and lower costs post-merge, this could easily be reflected in a shift in market values.
