As Ethereum approaches the one-year mark since its pivotal shift to the Proof-of-Stake (PoS) consensus algorithm, also referred to as “The Merge”, questions are emerging about the event’s effects on the cryptocurrency’s price.

Notably, the highly publicized upgrade merged the main network with the PoS-powered Beacon Chain, effectively establishing separate roles for execution and consensus.

One of the most profound changes introduced by The Merge was the transition from the energy-intensive Proof-of-Work (PoW) mechanism to the eco-friendlier PoS algorithm. As ZyCrypto reported, Ethereum’s energy consumption saw a staggering 99.9% reduction with its power usage plummeting from 21.41 TWh to 836 kW, marking a significant environmental improvement.

Another crucial outcome of The Merge was Ethereum’s shift towards a deflationary model. This shift was initiated by the implementation of EIP-1559 during the London hardfork in August 2021, which involved burning a portion of transaction fees. According to data by Ultra Sound Money, the reduction in new coin issuance accelerated after The Merge, leading to a decrease in Ethereum’s supply by more than 300,000 ETH.

However, while the deflationary nature of Ethereum is expected to drive up demand and potentially boost its price, Ethereum’s relative value, compared to Bitcoin, has faced challenges, declining by approximately 25% over the past year.

Notably, Ethereum’s price, when paired with Bitcoin (still a Proof-of-Work coin), has shown a pattern of lower highs and lower lows, as highlighted recently by Benjamin Cowan, Founder and CEO of ITC Crypto.

“You may notice that ETH / BTC tends to lose its support levels on BTC rallies. Many say that ETH/BTC is “holding up well” but it is still a series of lower highs and lower lows since the merge Supply-based models (but it’s deflationary!) do not tell you anything about demand.” Cowan wrote on X, Thursday.

Moreover, Ethereum has experienced a shift in dominance within its ecosystem, particularly toward liquid staking protocols. The PoS transition allowed users to participate in staking with smaller amounts of ETH, leading to a surge in liquid staking, with approximately 10% of the total Ethereum supply, equivalent to 11.96 million ETH, now locked in platforms such as Lido Finance.

However, this shift towards liquid staking has raised concerns about centralization within the network exerting downward pressure on the ETH/BTC price. That said, while there’s a general improvement in the ETH/USD price with the price creating higher highs, it will be hard to tell when the former will find a bottom, considering the aforementioned concerns.