The Ethereum (CRYPTO: ETH) price is up just under 2% since this time yesterday, currently trading for US$1,576 (AU$2,319).
That puts the world's number two crypto by market valuation up 8% since this time last week, according to data from CoinSpot.
For some context, the Bitcoin (CRYPTO: BTC) price has been flat over the past seven days while the NASDAQ is down 4%.
So, why is Ether outperforming?
The Ethereum Merge is nigh
Ethereum's designers have spent several years working to transition the crypto's blockchain from proof of work (POW) to proof of stake (POS).
In a nutshell, POS will see miners stake some of their Ether to be allowed to participate in verifying transactions. This will result in far fewer computers involved in every transaction than under the current POW protocol, which is still used by many tokens, including Bitcoin. That, in turn, means far less energy will be used while speeds increase and costs come down.
Now, after extensive testing and numerous delays, the first stage of the merge is set to kick off tomorrow, 6 September. The next phase will occur between 10 September and 20 September.
And this could well be helping Ether outperform big brother Bitcoin recently.
"Many investors have placed strong hope in Ethereum's merge positively impacting the price of the coin, although nothing is guaranteed," Ray Brown, CoinSpot's head of marketing, said.
According to Brown:
With the announcement of a hard rollout date just a week away, there are some expectations from Aussie investors that prices could rally and stay strong. There's been some climbs in price, bringing it above US$2000, but no massive peaks that have endured. Right now, the price is relatively low compared to previous peaks this month.
What will happen after the merge?
Whether or not Ether continues to power ahead of Bitcoin in terms of price gains will depend, among other things, on how the blockchain performs under the new POS protocol.
"The potential opportunity for investors post-merge relies on Ethereum's core promise coming to fruition," Brown said. "Essentially, if the merge does pave the way to a more efficient, cost-effective and decentralised method of issuing and executing smart contracts, investors and businesses will have a compelling reason to increase their support of the Ethereum blockchain."
Brown added:
This represents one of the major innovations in the space and all eyes are on whether this provides investors with a possible uptick in price.
For Aussie crypto investors, the merge may look like an opportunity to re-enter a bullish mindset. But with such a high bounty on bug hunting and a value proposition that is yet to come true, some volatility on the Ethereum network should be considered in the months ahead.
