The ratio of the price of ether to that of bitcoin reached the highest since December 2021, as Ethereum’s highly-anticipated Merge upgrade, which is expected to lower the blockchain’s carbon footprint and reduce ether supply, officially kicked off Tuesday.
The ETH/BTC ratio reached as high as 0.08 Tuesday, as ether
traded at around $1,600, up 0.5% over the past 24 hours, while bitcoin
lost 3.6% to around $19,101, according to CoinDesk data.
Ethereum’s Merge is anticipated to transition the blockchain from proof-of-work to proof-of-stake, a consensus mechanism that is much more energy-efficient. The upgrade is likely to happen between Sept. 13 and Sept. 15, according to Ethereum co-founder Vitalik Buterin.
The Bellatrix upgrade, which marks the beginning of the Merge, was activated Tuesday.
Despite ether’s strength over bitcoin, ether futures are trading well below spot prices, as traders position themselves in preparation for a potential chain split.
Ethereum miner Chandler Guo in late July proposed to “hard fork” the Ethereum blockchain, or splitting the chain into a duplicate version based on the proof-of-work consensus mechanism. Some miners vowed support for Guo’s proposal, since the Merge would make mining obsolete. It isn’t clear how much popularity the new chain might gain.
Still, if the hard fork materializes, all ether holders are expected to receive an equal amount of new tokens on the forked chain, in line with what usually happens during forks.
Hear from Mike Novogratz at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The Galaxy Digital CEO has ideas about navigating the crypto winter.