You wrote some valid points in your post. However, some of them can be solved in another way.
However, the current market situation has already accomplished point one. We see alot less spam accounts, even regular account holders have left the crypto scene due to the current unfavorable market condition.
You're of course right, but IMO this was caused not only by market conditions but also by the Merit system. A big part of the spam accounts that left could return if it was "abolished" right away. The spam problem is far from being "solved". There is still lots of signature spamming around.
If the forum was totally (or nearly-free) of spam and full of quality posts again, like ~2012 or so, then I would support your idea to abolish merit - but including a "probation period", if the spam returns then merit should also return.
But rather, who should be allow to "rank-up" base on their Merit points.
Hm? There is no selection other than merit and activity. If you post quality stuff and are active, you will rank up.
Lastly, the third point seems like "re-inventing the wheel" to me. The account holder's rank should suffice to be their credential. Isn't it?
Having created an account a year ago and posted with an automated script once per day would be enough to get at least Sr (if not Hero) status if merit was abolished. So "rank" alone doesn't have any meaning.
Given the current market sentiments, many BCT members already left and may never come back. And that also includes the Merit source holders, this resulted in less and less Merit points going around.
That is easily solvable - the administration should control the "spending" of merit sources and stock up (create more sources and expand the sMerits of existing sources) if the effective numbers of merits spent by sources diminishes.