Over the past week ETH has gained 48%, outperforming most of its major competitors like Bitcoin. As the Merge approaches, it goes higher than a broader market, but the outlook remains bearish.
While this might sound like good news to ETH users, there might be a two-faced scenario behind this all.
Some say the current Ethereum up and downs could be a bull trap given the macroeconomic factors at play.
The asset has been going downhill for the past eight months and bear markets usually last a bit longer and that is the reason for most experts believing that this is actually a bull trap.
What’s a bull trap? A bull trap is an inaccurate signal that shows a decreasing trend in a crypto asset has reversed and is now heading upwards, when in fact, it will continue downward.
The Merge will reduce the network’s energy consumption by more than 99% but it won't affect the transaction fees significantly.
There are also concerns regarding a flood of Eth after the merge and its release from staking smart contracts.
Up to this moment the deposit contract for staking on the Beacon chain, the blockchain providing the spine of the Ethereum 2.0 ecosystem, has collected over 13 million ETH.
Beacon chain is the core of the Ethereum 2.0 chain, which is planned to merge with the existing Ethereum chain and replace miners by July this year.
ETH is still down 71.3% from its November. Investors, however, have been gradually collecting ETH. The Ethereum 2.0 ecosystem has now accumulated over 13 million ETH. Nonetheless, there is still a lot of negative sentiment regarding the asset’s price.