The long-anticipated Ethereum Merge has come and gone, marking one of the most significant technological shifts in blockchain history. Yet, in the weeks that followed, Ethereum (ETH) has seen its price drop by nearly 20%, while Bitcoin (BTC) dipped below $20,000. On the surface, this paints a picture of a classic “sell the news” event — a market reaction where anticipation drives value up, only for prices to collapse once the milestone is achieved.
But according to Bankless, a leading voice in the crypto research space, this narrative may be premature. In their latest analysis titled “It’s Not Priced In,” they argue that Ethereum’s fundamental value hasn’t yet been reflected in its current market price. The Merge, far from being the end of a bullish cycle, could instead be the starting point of a longer-term revaluation.
Let’s explore why major supply-side events in crypto — including Bitcoin halvings and past Ethereum upgrades — rarely see their full impact priced in immediately. And why history suggests ETH could still be undervalued.
Historical Precedent: Supply Shocks Are Rarely Priced In Immediately
One of the central arguments put forth by analyst Lucas Campbell is rooted in historical data. He examined five pivotal supply-altering events in crypto history:
- Bitcoin halving (2012, 2016, 2020)
- Ethereum’s Beacon Chain launch
- Ethereum Improvement Proposal (EIP)-1559
In each case, the market did not fully reflect the long-term implications of reduced supply at the time of the event. Instead, significant price appreciation occurred months after the actual occurrence.
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Bitcoin Halvings: Delayed Price Discovery
Bitcoin’s block reward halving happens approximately every four years, cutting the rate at which new BTC enters circulation. Conventional wisdom suggests that this scarcity should drive immediate price increases.
Yet the data tells a different story:
- After each halving, Bitcoin reached new all-time highs roughly 18 months later.
- The post-halving rally has consistently followed a parabolic curve, not an instant spike.
- Despite growing awareness, the magnitude of gains has slightly diminished with each cycle — though still substantial.
For example:
- 2012 Halving: Price surged from ~$12 to over $1,000 within 18 months.
- 2016 Halving: Rose from ~$650 to nearly $20,000 by late 2017.
- 2020 Halving: Jumped from ~$8,000 to an all-time high of $69,000 in late 2021.
This delayed reaction suggests that markets don’t instantly "price in" supply shocks. Instead, it takes time for investor sentiment, macro conditions, and on-chain fundamentals to align and drive sustained demand.
Ethereum’s Upgrades: A Pattern of Post-Event Gains
If even predictable events like Bitcoin halvings aren’t immediately reflected in price, what about more complex, less scheduled upgrades like those on Ethereum?
Campbell argues that Ethereum’s evolution involves even greater uncertainty — making it harder for traders to front-run price movements.
The Beacon Chain Launch (November 2020)
When Ethereum launched its Beacon Chain — the foundation for proof-of-stake — ETH was trading around $450. At the time, participation was limited to early stakers who deposited 32 ETH into the new system.
Despite the technical complexity and lack of immediate user-facing benefits, ETH began a strong upward trajectory. Within seven months, it surpassed $4,000, fueled by growing confidence in Ethereum’s roadmap and broader market momentum.
This wasn’t a knee-jerk reaction. It was a gradual recognition of long-term value.
EIP-1559 (August 2021)
Another critical upgrade, EIP-1559 fundamentally changed Ethereum’s fee model by introducing a fee-burning mechanism. Approximately 70% of transaction fees are now permanently removed from circulation, creating deflationary pressure under certain network conditions.
At launch, ETH was recovering from a sharp correction in May 2021. Just 3.5 months later, it broke its previous all-time high and continued climbing toward $4,800 by year-end.
Again, the major price move came after implementation — not before.
The Merge: A Supply Shock Unlike Any Other
With this historical context, Campbell positions The Merge as another major supply-side catalyst — one whose full impact remains unrealized.
By transitioning from proof-of-work to proof-of-stake, Ethereum drastically reduced its energy consumption and altered its issuance model:
- Annual ETH issuance dropped by over 80%.
- With EIP-1559 in place, Ethereum has become net deflationary during periods of high usage.
- Staking now locks up over 15% of total supply, reducing liquid market availability.
These changes represent a structural shift in Ethereum’s economics — yet the price has declined since completion.
Why?
Because markets are currently dominated by macroeconomic headwinds:
- Aggressive interest rate hikes by the Federal Reserve
- Global energy crises linked to geopolitical tensions
- Escalating risks in cross-strait relations between China and Taiwan
These factors have created a risk-off environment across all speculative assets — including cryptocurrencies.
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FAQ: Addressing Key Questions About Ethereum’s Future
Q: Isn’t the drop in ETH price after The Merge proof that it was “sold the news”?
A: Not necessarily. While short-term traders may have taken profits, historical patterns show that major upgrades often lead to delayed rallies. The real value accrual tends to happen over 12–18 months, not days or weeks.
Q: How does The Merge compare to Bitcoin halvings?
A: Both reduce supply growth significantly. However, Bitcoin halvings are predictable and cyclical, while The Merge was a one-time architectural transformation. Its effects are more profound — combining lower issuance with deflationary burns and increased network security.
Q: Can Ethereum go deflationary permanently?
A: Under normal network load, Ethereum fluctuates between inflationary and deflationary states. However, during periods of high transaction volume (e.g., NFT mints or DeFi activity), more ETH is burned than issued — resulting in net deflation. As Layer 2 adoption grows and gas efficiency improves, this dynamic could become more consistent.
Q: What would trigger the next leg up for ETH?
A: A combination of improving macro conditions (e.g., pause in rate hikes), increased institutional staking participation, and growing demand from decentralized applications (dApps). Additionally, future upgrades like proto-danksharding could enhance scalability and attract more developers.
Q: Is staking safe after The Merge?
A: Yes. The transition to proof-of-stake has strengthened network security. Over 28 million ETH are staked across more than 900,000 validators — making attacks prohibitively expensive. Withdrawals will be enabled in upcoming upgrades (e.g., Shanghai), further increasing flexibility.
Looking Ahead: Why ETH Is Still Undervalued
Lucas Campbell concludes that unless global macro conditions deteriorate significantly — such as prolonged recession or escalating conflicts — it would be surprising if Ethereum fails to see substantial gains over the next 12 to 18 months.
The core argument rests on three pillars:
- Supply contraction: Lower issuance + fee burning = tighter supply dynamics.
- Network resilience: Proof-of-stake has proven robust and secure.
- Historical precedent: Past supply shocks were followed by delayed but powerful rallies.
Even with current bearish sentiment, Ethereum’s fundamentals have never been stronger. Developer activity remains high, Layer 2 ecosystems are expanding rapidly, and institutional interest in staking continues to grow.
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Final Thoughts
The idea that Ethereum’s value is “not priced in” isn’t blind optimism — it’s supported by years of observable market behavior. Just like Bitcoin halvings and earlier Ethereum upgrades, The Merge may mark the beginning of a new accumulation phase rather than the peak of a cycle.
For informed investors, volatility isn’t a warning sign — it’s an opportunity.
As macro pressures ease and confidence returns, Ethereum stands poised to reassert its role as the backbone of decentralized innovation — and potentially reward those who recognize its latent value.
Core Keywords: Ethereum Merge, ETH price prediction, supply shock crypto, EIP-1559, proof-of-stake transition, Bitcoin halving cycle, net deflationary blockchain