The Merge has brought many debates for the second largest crypto asset, Ethereum. Each week the crypto market witnesses new and sometimes surprising news about the big crypto event. Now the Chainalysis team has announced that the price of the second largest crypto asset could decouple from other assets following the Merge.
According to Chainalysis, ETH's price may decouple from other cryptocurrencies following the Merge, while staking yields may drive institutional demand.
Chainalysis has explained in a report that the upcoming update for the Ethreum would introduce institutional investors to staking yields similar to certain instruments such as bonds and commodities and will also make the crypto asset much more eco-friendly.
In a report that reads:
“Ether’s price could decouple from other cryptocurrencies following The Merge, as its staking rewards will make it similar to an instrument like a bond or commodity with a carry premium.”
A 10-15% yield is promised for ETH staking annually, therefore making ETH a good alternative for “institutional investors”.
According to data from Chainalysis, the number of institutional ETH stakers has “been steadily increasing” from under 200 as of January 2021 to around August this year. Chainalysis adds that if this number keeps increasing at a faster speed, this will give investors enough reason for taking “Ethereum staking as a good yield-generating strategy.”
Another good reason that adds more certainty to Ethereum decoupling is Ethereum’s moving to a proof-of-stake (PoS) blockchain which will reduce its energy consumption requirements by almost 99% following the upgrade.
See also: buy and sell Ethereum
According to the Ethereum Foundation:
“The switch to PoS will also make Ethereum more eco-friendly, which could make investors with sustainability commitments more comfortable with the asset. This especially applies to institutional investors.”
The importance of the PoS Ethereum chain will also produce stronger security guarantees for institutional investors along with ETH’s potential to become a deflationary asset.