The Return of ETHPOW: What to Expect If It Comes Back

According to a recent report, if ETHPOW ever comes back to life after the Merge, its downside target would be $18.

It's been a tough few days for ETHPOW (ETHW) holders. The token was listed on multiple exchanges, but the price has dropped significantly. Some investors are holding out hope that the price will rebound, but it's looking increasingly unlikely.

Ethereum's price falls sharply, losing 80% of its value in a matter of days.

It is clear that ETHW's price has been in a downward trend since its market debut. However, it is important to note that the price has dropped by more than 80% to $25 on Sep. 10. This shows that the market is still very bearish on ETHW.

ETHW/USD daily price chart. Source: TradingView
The ETHW/USD pair is currently trading at $123.45, down 0.54% on the day.

There is a lot of speculation surrounding the upcoming network update on Ethereum. Some people believe that this could result in a chain split. ETHPOW is a futures ticker that has been created in anticipation of this potential event. It will be interesting to see how things play out in the coming weeks and months.

Ethereum's move to proof-of-stake is a major change that could have wide-ranging implications for the network. The switch could help to improve Ethereum's scalability and security, while also making it more energy-efficient. This could make Ethereum more attractive to businesses and users, helping to drive adoption of the platform.

The Ethereum network is set to undergo a major change in the near future, with the planned obsolescence of its mining operations. Instead of miners, the network will rely on "validators" to perform the same tasks, but with a much lower barrier to entry. This should help to secure the Ethereum network and make it more accessible to a wider range of users.

It's clear that the upcoming change to Ethereum's PoW algorithm will have a big impact on miners. Many will be forced to switch to other chains or shut down altogether. Ethereum Classic seems to be the biggest beneficiary of this change, as it has become a haven for miners. This is good news for ETC, but it remains to be seen how long this will last.

The chart shows that Ethereum Classic's hashrate is rising while Ethereum's hashrate is dropping. This indicates that the two cryptocurrencies are heading in different directions. Ethereum Classic is gaining popularity and miners are switching to it. This is good news for Ethereum Classic and bad news for Ethereum.

Ethereum Classic vs. Ethereum hash rate. Source: CoinWarz
The Ethereum Classic versus Ethereum hash rate battle is heating up.

It's clear that Ethereum Classic (ETC) is one of the most popular options for ETH miners. However, it's also clear that there are other options out there for miners who are looking to make a profit.

I believe that miners should continue to validate and add blocks to the current PoW Ethereum chain after the Merge. This so-called contentious hard fork would keep the current Ethereum PoW chain alive, which Guo and supporters have termed ETHPOW. I think this is the best way forward for Ethereum, as it would allow us to keep the current chain alive and continue to benefit from its security.

The new ETHPOW chain will have its asset called ETHW. Anybody holding ETH ahead of the Merge will receive an equal amount of ETHW after the potential chain split.

The Ethereum network is about to undergo a major upgrade, which could lead to increased volatility in the price of ETH. BitMEX CEO Arthur Hayes has warned that the upgrade could trigger a sudden price movement in either direction.

Given the significant downside risk of ETHPOW, traders appear to be more comfortable holding ETH, enabling them to receive ETHW as well should a chain split occur. However, the potential upside of ETHW appears to be enticing enough for some to take the risk.

It's interesting to see the ETHW price declining, as it could suggest that traders believe a chain split is becoming less likely. This would be good news for Ethereum, as a split could potentially disrupt the network and cause major problems. Hopefully this trend continues and we see the ETHW price continue to drop.

Paradigm report casts another bearish blow on ETHW

In a report published Sep. 1, crypto investment firm Paradigm argues that the cost of one ETHW token should not be more than $18 after launch. That is nearly 90% below the token's record high of $198, established on Aug. 9. Paradigm's report is based on the assumption that ETHW will be used primarily as a utility token rather than a speculative investment.

The firm cited backwardation, when futures trade lower than the spot prices, in the Ethereum Sep. 30 futures contracts as the reason behind its $18-price target for ETH. We believe that this backwardation is a sign that the market is bullish on Ethereum in the short-term, and as such, we believe that ETH is a good investment at current prices.

Ethereum's move to a proof-of-stake consensus algorithm is a positive step forward for the cryptocurrency. Some exchanges are already planning to take advantage of this by referencing Ethereum's PoS version in their ETH futures/perpetual contracts. This will help to ensure that prices are accurate and that the market remains liquid.

The ETHPOW token could potentially be worth $18 at the time of the fork, due to the current $18 discount of ETH futures prices compared to spot prices. This would provide a valuable opportunity for holders of the token.

FTX Ether futures basis. Source: Coinglass
The FTX Ether futures basis looks promising, according to Coinglass. I believe that this will help to stabilize the price of Ether and provide a more predictable market for investors.

The report makes a compelling case that the market is underestimating the value of ETH PoW. By looking at the spot-future basis, we can see that the market is only pricing in the value of ETH PoW, not the value of ETH POS. This is a mistake, as ETH POS is a significant portion of the Ethereum network.

"Currently, the basis is implying ETH PoW to be priced ~$18, which is ~1.5% of ETH market cap."