A recent report has narrowed ETHPOW’s drop target to $18 if the token is ever revived post-merger.

Despite initial success, the listing of ETHPOW (ETHW) on several crypto exchanges was followed by an enormous price drop.

ETHPOW down 80%
On the daily chart, the price of ETHW fell by over 80% to $25 on September 10, more than a month after it debuted on the market.

Daily ETHW/USD price chart. Source: Trade View
First of all, ETHPOW only exists as a futures ticker conceived in anticipation that the upcoming upgrade of the Ethereum network could lead to a chain split.

By mid-September, Ethereum will undergo a major protocol change dubbed a merger that will change the existing consensus mechanism from Proof of Work (PoW) to Proof of Stake (PoS).

Therefore, Ethereum will replace its army of miners and replace them with “validators”, which are nodes that perform the same tasks simply by placing a certain number of tokens on the network.

As a result, current Ethereum miners will be forced to switch to other PoW chains or shut down. Ethereum Classic (ETC), which carries the Ethereum PoW source code, has benefited the most by becoming a haven for such miners.

For example, the chart below shows the increase in Ethereum Classic hash rate and the decrease in Ethereum hash rate a few days before the merger.

Ethereum Classic vs. Ethereum Hashrate. Source: CoinWarz
But Ethereum Classic may not be the only option for ETH miners.

Chandler Guo, one of the most prominent crypto miners, suggested that after the merger, miners should continue to verify and add blocks to the current Ethereum PoW chain. This so-called controversial hard fork will support the current Ethereum PoW chain, which Guo and his supporters have dubbed ETHPOW.

And just like the Ethereum blockchain has its own coin in Ether (ETH), the new ETHPOW chain will have its own asset called ETHW. Anyone holding ETH before the merger will receive the same amount of ETHW after the possible chain split.

Related: Ethereum merger could lead to high volatility, BitMEX CEO warns

However, given the significant downside risk for ETHPOW, traders appear to be more comfortable holding ETH, allowing them to receive ETHW in the event of a chain split.

Additionally, the drop in ETHW price could indicate that traders are betting that the Ethereum chain fork is becoming less likely.

Paradigm Report records another declining hit at ETHW
In a report published on Sept. 1, cryptocurrency investment firm Paradigm claims that the value of an ETHW token should not exceed $18 after launch. This is almost 90% below the token’s all-time high of $198, which was set on Aug. 9.

The company cited the reversal in which futures in the September 30 Ethereum futures contracts are trading below spot prices as the reason for its ETHPOW price target of $18.

The report highlights that some exchanges, including FTX and Deribit, will price their ETH futures/perpetual contracts by reference to the PoS version of Ethereum.

And with the ETH futures price now trading at a $18 discount to spot, the ETHPOW token could see a valuation of at least $18 after a potential fork.

The basis of FTX ether futures. Source: coin jar
“We can derive how much the market valuation of ETH PoW will be worth simply by looking at the spot futures basis since spot = POS + POW and the future is POS only,” the report explains, adding:

“ETH PoW is currently expected to be priced at ~$18, which is ~1.5% of ETH’s market cap.

Source: CoinTelegraph