The Merge: Why Ethereum Investors Must Remain Cautious as Bellatrix Upgrade Goes Live

The Bellatrix Upgrade is set to go live on the Beacon Chain of the Ethereum Network today as the entire community prepares for the forthcoming Merge of the current Proof-of-Work (PoW) chain with the Proof-of-Stake (PoS) model.

Over 2 years, the process of migrating Ethereum from the PoW chain to the new one has been in the works. Developers, particularly those from the Ethereum Foundation, have committed quite a number of resources and efforts to the Merge, which is now slated to go live in the mainnetdays' time. 

By design, the current upgrade of  Bellatrix is a pivotal event that will set the pace for the Merge. Many investors and Ethereum users are preparing for this event in a whole number of different ways as expectation mounts.  

Ethereum miners have a different agenda. Knowing the 'Difficulty Bomb' that will be introduced as soon as the Merge is complete, making mining very hard, more computing power is being plugged in at this time to harvest as much as possible now. This has recently pushed the Ethereum mining difficulty to a new All-Time High (ATH).

Investors Need to Watch Out 

That the Ethereum Foundation came out to debunk some myths about this forthcoming merge event is a sign that expectations might be too bogus and might not be met. 

For now, we know the new PoS protocol will only be more energy-efficient and not necessarily make transactions faster or gas fees cheaper. Investors' expectations that the new Ethereum protocol will lead to a massive upsurge might not also be correct, even though this price action is hard to predict.

Two key factors may negatively impact the price of Ethereum post-merge. One is that the miners dump some of their coins in protest, as the new protocol will generally make them obsolete. The second is if there is a hard fork with an accompanying token that now catches the interest of many investors, either retail or institutional.

These two events can weigh down the price of Ethereum, and as such, investors will need to take caution when making their investment bets at this time.

At the time of writing, Ethereum was changing hands at $1,634.99, up 3.93% during the Asia trading session, per data from CoinMarketCap.