God save the Merge
4 min read

God save the Merge

Cryptic ball: on the verge of a precipice.

Ah, Ethereum's Merge is finally here - likely taking place in roughly 20 minutes. I first talked about this important upgrade on May 12th, 2021, when it was initially expected for Q1 2022! I'm glad the long wait is finally over. What's next?

  • Well, on those bygone days of May, more than one year ago, I argued the Merge would be the "biggest buy the rumour, sell the news" event of the cycle - later wondering if it would even coincide with the market top.
  • Due to the big delays around the shift from Proof-of-Work to Proof-of-Stake, the market eventually topped without Ethereum's help. But now we may well be on the verge of another precipice, as both stocks and crypto look weak.
  • Overall, we may see some short-term pump this morning - in case the Merge's implementation goes as planned - as hedged traders unwind their shorts after collecting whichever forks that may be created by the redundant miners.
  • Surely, the next hours will be volatile - even if volatility fades away over the next days. However, remember that the Merge won't magically improve the demand for ether. Thus, many will be incentivised to take profits soon.
  • So until there's more appetite for risk assets globally, the price of ether (and all crypto) is still contingent on the macro conditions. And it's all about the Fed on that front - with the next FOMC meeting on the 21st scaring the markets.
  • Yes, stocks had their worse day in two years earlier this week, but that doesn't mean they have found a bottom yet. US equity indexes don't look good and we may see new yearly lows as the cold hits the Northern hemisphere.

Let's continue monitoring the markets closely. There are not many opportunities now - except for fast-moving players and arbitrageurs, and perhaps degen low-cap hunting. Just remember doing nothing is often the best trade and enjoy the merge!

Chart art: on the verge of a reset.

ETH futures longs have been wildly incentivised over the past few hours as more traders are short, hedging their spot bets to collect forked coins in a risk-free way. Watch out as funding rates reset over the next hours as traders sell their spot ETH and close their shorts. While this shouldn't have an impact on price, the funding rate reset may make longs less appealing.
For perspective, this is an all-time low for ETH funding rates.

Three things: on the verge of a new benchmark.

Tweet tip: on the verge of a breakdown.

Sentiment is so volatile right now. It really shows the despair of traders around the world.
So just remember you can step away from your computer while the merge unfolds.

Meme moment: on the verge of a fusion.

Like watching paint dry.
Click on the image to learn the backstory about this panda-themed meme NFT!

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Our newsletter offers opinions and insights from analysts in the cryptoasset space. It is not intended to be investment advice, and should not be treated as such. You must not rely on its information as an alternative to financial advice from a qualified professional. Without prejudice, we do not undertake or guarantee that its information is correct, complete or non-misleading; or that the use of the guidance in the report will lead to any particular outcome or result.