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JPMorgan Sees Some Concerns After Ethereum Merger

JPMorgan Sees Some Concerns After Ethereum Merger
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JPMorgan has expressed some concerns about the Ethereum blockchain following the network’s transition to a proof-of-stake (PoS) consensus mechanism, a process that has been dubbed “Merge”.

Earlier this month, a change to the Ethereum network spurred a hard fork, splitting the blockchain in two and creating a fork chain called Ethereum PoW.

Some exchanges and platforms have demonstrated support for an updated forked version that still uses Proof of Work (PoW).

19 former Ethereum mining pools are active in it, according to a JPMorgan research note that was released on Wednesday. This new forked chain could divide the Ethereum community, the firm says.

Binance
Binance

The second problem is that the blockchain has become less decentralized, the bank said.

JPMorgan notes that the price of Ethereum (ETH) has dropped sharply. The report states that this drop was likely driven by a combination of buy rumor /sell news flows specific to the Ethereum merger event, as well as widespread weakness in risky assets as a result of more aggressive central bank action.

The merger is the first of five upgrades planned for the Ethereum blockchain.

Meanwhile, the move to โ€œbackwardationโ€ in the futures market is โ€œa manifestation of a shift towards more bearish sentiment in the cryptocurrency markets in recent weeks,โ€ JPMorgan said in a note.

Backwardation occurs when the spot price of an asset is higher than its futures price.

In terms of mining, the Ethereum Classic ETC token was the main beneficiary of the merger. The hashrate of the network has doubled, while the number of tokens of other GPU-compatible PoW blockchains, such as Ravencoin and Ergo, has also increased significantly, according to a note to the note.

You can read more here: Citi Says Ethereum Remains Relatively Stable Despite Importance of Merger

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