Will Ethereum (ETH) Price Drop After Merger? Should Investors Sell First?

Former Bitmex CEO Arthur Hayes in a blog post Ethereumevaluated the possible effects of the merger (Merge), which is expected to take place in mid-September, on the ETH price.

Saying that if Merge is successful, ETH will become even more deflationary, Hayes stated that this will reflect positively on the price.

Merger Success/Failure

“If the merger is successful, due to the positive relationship between the price and the amount of currency deflation, traders will buy ETH and raise the price, knowing that as the price goes up, the network will be used more and become more deflationary.

This is a virtuous cycle for bulls. The peak here is when all humanity has an Ethereum wallet address.

If the merger is not successful, there will be a negative relationship between the price and the amount of currency deflation. In this scenario, I believe traders will either short sell or choose not to own ETH.”

What Is The Market Waiting For?

“

Recently, ETH has outperformed BTC by 50%. Therefore, the market is optimistic that there will be a successful merger on the horizon.

While this is the case in the spot market, we see that the selling pressure continues in the futures market. This could be a preferred way of hedging for traders who physically hold ETH.”

Should ETH Be Sold Before Full Merger?

“The positive effect indicates that you should at least lower your position just before the merger, as it is raising the pre-merger price of ETH. (Buy the news, sell the truth)

However, real reality rarely lives up to expectations.

Structural decline in inflation will only occur after the merger. I believe this will play a similar role to Bitcoin halvings.

However, ETH price is likely to drop slightly right after the merger. Those who sell or reduce positions right before will feel good in the first stage. However, the price may continue to rise gradually once deflation begins. At this point, you need to decide when to return to your position. This will be a difficult and painful process.

Personally, I will not diminish my position as I enter or immediately after merging with these thoughts in my mind. If anything, I will add to my position if the market sells. Because I think the best is not priced today.”

You can find Hayes’ more detailed blog post here.

*Not Investment Advice.