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Can the upcoming Merge event pull ETH back from the abyss?

ETH holders continue to put their faith in the upcoming Merge event that will pull the price back after the latest catastrophic drop. At the time of writing, ETH has lost 16% of its value and slipped to $1,183. But since this progress has been delayed several times, ETH may have another journey ahead.

The Ethereum Network developers have decided to delay the difficulty bomb – an important step towards the much-anticipated Merge upgrade. They set a delay of 2 months to "make sure we check all the numbers before picking the exact latency and rollout time," according to core developer Tim Beiko's tweet .

This difficulty bomb will cause mining profits to plummet, shrinking the incentive for miners before the long-awaited Merge. With such a delay, many take a bearish view on the biggest altcoin. However, the scenario here could be different by looking at the growth rate on the Ethereum network.

The number of daily ETH transactions is growing consistently in the range of 1 million to 2 million by 2022. This could indicate that the network has combined or handled the transaction load efficiently.

Daily transaction count on Ethereum | Source: Etherscan

Meanwhile, the number of addresses on the network paints a similar picture. The number of addresses with non-zero balances hit a new all-time high, just like it did exactly a year ago.


Number of addresses with balances other than 0 | Source: Glassnode

According to blockchain data site Glassnode , there are currently 82,151,788 addresses holding the second-largest cryptocurrency by market capitalization. In addition, the market continues to make predictions about Merge.

Despite the dire price reaction to the first successful Merge on the Ropsten testnet, staking on ETH 2.0 has remained steady. The proof is that the total amount of deposits into the ETH 2.0 deposit contract is continuously increasing.


Total value locked to ETH 2.0 | Source: Glassnode

Indeed, this is much-needed support for Merge and the end results it brings.

While the aforementioned developments serve as short-term support for this plunging token, it probably won't last.

Glassnode's top on-chain analyst, better known as Checkmate, has highlighted a potential DeFi disaster that could push the ETH price lower in 2022.

Specifically, the ratio between the market capitalization of ETH and the top 3 stablecoins (USDT + USDC + BUSD) is now up to 80%. The rate was only at 50% on May 1.

Market capitalization of ETH and top 3 stablecoins | Source: Twitter

Ethereum is a platform that hosts over $100 billion worth of leveraged loans and DeFi positions. Most people borrow stablecoins. If the network is worth less than the stablecoin it's built on, that means a lot more debt than collateral. So the risk of collapse is alarming.

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