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Raoul Pal: Why Ethereum will outperform Bitcoin after the merge

 


The former Goldman Sachs executive explained in a video on July 26, 2022 why the Ethereum merge matters so much and why he thinks Ethereum could become the world's largest cryptocurrency.


Crypto investor Raoul Pal believes Ethereum 's potential is far greater than Bitcoin 's . After the Ethereum merge , which is scheduled to take place in September 2022, there will be a supply shock of “incredible proportions” , according to Pal , which will have a positive effect on the Ethereum price. According to his forecast, Ethereum will replace Bitcoin as the largest cryptocurrency in the world.


Raoul Pal called the Ethereum merger the “most important event in crypto space since the development of stablecoins and ETH itself” . While the merger may not be successful, Pal is willing to take the risks involved.


Ethereum merge will strengthen ETH course

With the “merge”, the consensus mechanism of the Ethereum blockchain is switched from Proof-of-Work (PoW) to Proof-of-Stake (PoS). While the PoW consensus mechanism uses ETH miners to solve cryptographic puzzles and validate transactions, the PoS consensus mechanism uses the coins themselves for validation. This not only makes the cryptocurrency more environmentally friendly than Bitcoin , it also reduces the ETH supply.


Raoul Pal argues that post-merge ETH supply will become tighter as there will be no more miners selling ETH afterwards. However, this is a comparatively small supply shock, with $1 billion to $2 billion no longer pouring into the market each month.


Crucial to the supply shock, according to Pal, was the EIP-1559 upgrade of 2021 (“Ethereum Improvement Proposal”), where the development team introduced the so-called burning mechanism . Whenever an ETH transaction takes place, part of the ETH sent is “burned”, i.e. destroyed forever. According to Pal, the available ETH supply has already dropped by 65% ​​as a result. Even if demand remains the same, a falling supply would have a positive effect on the Ethereum price in the future. The upgrade is also one of the reasons Ethereum has outperformed Bitcoin since the upgrade was introduced, according to Pal.

Additionally, Pal anticipates that increasing demand for Ethereum and new capital inflows will further tighten the available ETH supply. Because many crypto investors will buy ETH and use it for staking. With staking, these are locked or unavailable on the market for one or more years.


Around 9% of all existing ETH is currently in staking. Pal thinks that number could rise to 30%. This would mean that around a third of all ETH would no longer be available - with positive consequences for the Ethereum price.


Raul Pal Bitcoin price prediction: $1 million

Even though Raoul is a big ETH fan, he still remains a Bitcoin proponent. As an investor, however, he prefers ETH because the cryptocurrency is not just a pure means of payment compared to Bitcoin . Simultaneously home to DeFi and numerous decentralized apps, blockchain may also play a crucial role in the new Web 3.


According to Raoul Pal, he holds both Ethereum and Bitcoin . Pal bought the first Bitcoins in November 2013. However, Investor then decided to sell most of his BTC and use the money to buy Ethereum . Pal currently only has one bitcoin .


Pal thinks the Bitcoin price could surge to over $1 million . The reason for this is the so-called network effect. Since the number of participants in a network initially grows exponentially, the crypto investor considers this forecast to be quite realistic and BTC to be significantly more attractive than most stocks.


Disclaimer

All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general information purposes only. Any action taken by the reader based on the information found on our website is entirely at their own risk.

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