The long-awaited "merge" finally introduced proof-of-stake validation and staking to the Ethereum (ETH 3.14%) blockchain network. The massive platform upgrade did not send Ethereum prices skyward, though. Instead, the Ether token fell 10% that week. It looks like crypto investors had priced every bit of this event's upside into the digital asset before it even happened.

With the merge in the rearview mirror, is it time to load up on Ethereum in early October?

Let's take a look.

The lack of excitement was expected

The indifferent market reaction to Ethereum's big upgrade didn't surprise me. This event was planned years in advance. The Beacon chain, which provides Ethereum's new proof-of-stake data validation functions, started its test runs way back in 2020. The planning stages go back even further. Investors had plenty of time to bake its effects into the cryptocurrency's price.

Yes, this was a momentous platform upgrade. Now, Ethereum runs faster and cheaper, using just 0.05% of the electric power it consumed as a proof-of-work system.

However, it's actually just one step in a longer journey. Ethereum co-founder Vitalik Buterin considers Ethereum's blockchain network to be 55% complete after the merge, and the developer community has several important follow-up improvements planned for 2023 and beyond.

Ethereum's real value-building qualities

Ethereum's market value depends on people actually using the blockchain network. The more Ethereum is used in decentralized finance apps, non-fungible tokens (NFTs), blockchain-based games, and other user-facing situations, the more each token will be worth.

The market is poised to grow dramatically from today's modest level of roughly 1.2 million transactions per day. Imagine a world where pretty much every consumer relies on blockchain-based apps for everyday banking services and payment options. Ethereum won't own the entire space, but it does have a head start on up-and-coming alternatives such as Solana and Avalanche. The challengers may be faster than Ethereum's post-merge platform, but they can't match the first and largest smart contract system's developer community.

Future catalysts

So what's holding Ethereum back today? It's a combination of factors:

  • Crypto investors crave a firm regulatory framework, both in America and internationally. It's hard to treat an investment seriously when it isn't clear how that asset will be taxed, secured, or limited in the long run.
  • Mass-market adoption is a gradual process. If you build some Ethereum-based apps, users will come. Then you build some more, drawing in even more consumers. Lather, rinse, and repeat -- over and over.
  • Deep-pocketed financial institutions are champing at the bit to join this exciting market. They are waiting for regulatory clarity and planning their market entry strategies in great detail. When the floodgates finally open, Ethereum and other cryptocurrencies should soar.

None of these catalysts are likely to arrive in 2022. There will be baby steps in that direction, including bills going through the red tape of Congress and banks dipping their toes in the cryptocurrency waters, but there won't be any major leaps ahead right now. People are too busy with inflation concerns and rising interest rates to really dig into this newfangled digital asset class.

On the other hand, this delay gives decentralized finance experts time to build and fine-tune their ideas. Meanwhile, cryptocurrencies and blockchain-based accounting systems are seeping into the public consciousness slowly. In this period of learning and building, the market is quietly building a ton of demand for game-changing Ethereum solutions in the future. Looking back at the ultimate blockchain explosion from the not-too-distant future, you'll remember this as an important calm before the storm. It'll be a get-rich-quick explosion, years in the making.

Buy Ethereum now and prepare to hold it for five years

So I don't think you have to slap the "buy" button on Ethereum right away, but I do believe that it's a good idea to accumulate Ether tokens over time. The big payoff may take a few years, and that's alright. Investing was always more of a marathon than a sprint anyway.