The ‘merge’ has arrived — Wednesday is your last chance to buy ether before historic makeover

The time has come for the merger.

One of the most historic events to date will take place on Wednesday when the systemwide upgrade to the ethereum blockchain rolls out. The native token to ethereum, ether, has been getting a lot of attention.

ether has jumped 32% in the past three months, compared to the 9% drop for bitcoins. Analysts say that anticipation around the merger has helped pump up the price, but some believe that the real upside will come after the merger.

The bull case for ethereum is going to be a lot stronger after the merger. She says that the main factor is that there will be less supply.

It will take a lot less energy to verify transactions, which has been a problem for the industry in the past. The proof-of-stake model requires validators on the network to pull ether out of circulation for an extended period of time in order to secure the network

If you staked your ethereum to the network, you will not be able to withdraw it for at least a year.

Slashing energy consumption by more than 99% will go a long way towards lowering the barrier to entry for institutional investors who have been battling the effects of contributing to the climate crisis. The White House warned last week that proof-of-work mining operations could make it hard to mitigate climate change.

Some skepticism has crept into the market.

The latest official read on inflation in the U.S., which punished risky assets on Tuesday and drove tech stocks to their worst day in over two years, has led to a drop in ether.

Jaydeep Korde said that an investor's time horizon for holding the coins determines whether to buy now or wait. Korde told CNBC that traders who plan to sit on their stake for a long time should be in good shape.

Korde thinks that trading in the short-term horizon is more volatile. The immediate risk was attributed to global economic conditions, geopolitics and inflation.

Korde said that ethereum would suffer the challenges of that volatility.

The upgrade won't make ethereum faster or cheaper. One developer told CNBC that if the user experience feels the same, that will be a sign that the merger went well.

As bitcoin mining faces blowback for its growing power consumption, the investor draw is the slash of energy usage.

A proof-of-work model has been used to mine ether since it was created. It uses a lot of energy and involves a lot of machines.

The new proof-of-stake method requires users to use their existing cache of ether to verify transactions.

The merger will result in a reduction of at least 99% in total energy use according to one estimate.

According to a note from Bank of America, the reduction in energy consumption after the merger may allow some institutional investors to purchase the token that were previously banned from purchasing.

Digital assets need institutional money to mature. Fundstrat said in a note that a successful merger would cement ethereum as the premier network.

It is more of an operating system for the industry than any other chain. The merge is the first in a series of planned upgrades that should result in faster and cheaper transactions.

A new verification model that replaces miners with "validators" has led to a reduction in the supply of the coin.

Less ether will be created as a result of this upgrade because the rewards for validators are smaller than those for proof-of-work miners.

Part of the digital currency that would otherwise be recycled back into circulation has already been burned as a result of an upgrade that went into effect last August.

The turning point for ethereum may have been three to six months ago.

Roughly every four years, the supply of the network is reduced.

When the prize for miners is cut in half, the production of the digital currency plummets. The halving was built into the code of the digital currency as a way to keep it from rising in value.

Fundstrat's Tom Lee told CNBC thatBitcoin can't issue any more shares The only way to increase the value of the network is to raise the price of the unit.

Since the beginning of the year, there have been three halvings of the digital currency. The last one took place in May 2020 and preceded a rally that lasted through late 2021.

The website for ether has a simulation of the supply changes. The model predicts that the annual issuance will fall from 6 million to 600,000.

Regardless of the changing dynamics that come with the merger, the market is likely to still be driven by a hefty dose of pure speculation and events that have nothing to do with the basics of the token or network.

The steep selloff this year is tied to rising interest rates and the Federal Reserve's efforts to keep inflation in check.

The merger may not change investor sentiment because they have been rotating out of riskier assets.

As the upgrade kicks into full gear, the price of the digital currency falls below $19,000.