Ether (ETH) rose to a two-month high early Thursday, outperforming bitcoin (BTC), after the Ethereum network ran the final dress rehearsal of its upgrade.
The native token of the Ethereum blockchain rose to $1,919, the highest point since June 1, extending Monday's rise of nearly 9%, CoinDesk data shows. The ether-bitcoin exchange rate or the ETH/BTC ratio rose to 0.078, a level last seen on Jan. 7, extending the recent bullish breakout.
The move happened after Goerli – one of the largest and most active Ethereum test networks – switched to the proof-of-stake consensus from the proof-of-work consensus at 01:45 UTC.
Analysts expect the Merge, which will combine Ethereum's current proof-of-work chain with the proof-of-stake Beacon Chain, to cause a notable reduction in ether's supply, bringing a bitcoin-like store of value appeal to ether.
Last month, developers hinted at Sept. 19 as the tentative date for the merge. Since then, ether has rallied 60% while bitcoin has gained 20%. The broader market capitalization has increased by 28% to $1.2 trillion.
Perhaps the Merge has filled the bullish narrative void, relieving the market battered by the U.S. Federal Reserve's aggressive interest rate hikes.
Traders have been piling into call options, or bullish bets, tied to ether. Some have been buying the cryptocurrency in the spot market and simultaneously selling futures contracts, creating so-called backwardation – a situation where futures trade at a discount to the spot price. The strategy would help traders safely pocket free coins from a potential post-merge chain split without having to worry about losses from ether price volatility.
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