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.
Three things: on the verge of a new benchmark.
- Foobar shares everything you need to know before the Merge.
- Raoul argues the "biggest story in the Merge is its benchmark yield".
- Adrian Sutton explains "the key things to look for to know the merge has gone smoothly".