Just weeks before it launches a major network upgrade, a CNBC analyst warns of an Ethereum merge.
CNBC Analyst Brian Kelly reveals risks about Ethereum merge
The CEO of cryptocurrency investment firm BKCM offered his views on Ethereum (ETH) prospects. In a recent episode of Fast Money, CNBC contributor Brian Kelly first discusses how the inflation mechanism for ETH can prevent investors from making as much money as they expect from profitable trades. In one part of the post, Kelly highlights some elements about the Ethereum merge:
I believe you are more likely to sell the news, which can be unreasonable given that you usually want to buy the news in cryptocurrency. However, everyone is buying Ethereum as they prepare to participate, and as a result, you will supposedly receive a return. I should point out that this is not actually a return. Simply put, you’re getting back your inflation rewards that somehow offset currency inflation. Actually, this is not a return.
“Merge will probably be a sell the news thing”
ETH is preparing to switch from PoW to PoS consensus mechanism in mid-September. Prior to that, Kelly predicted that investor excitement would inevitably result in a sell-off. However, both warn that there is a possibility of confusion or complete failure, which could have a negative impact on the price of Ethereum and the project itself:
As Merge starts, it’s probably more likely to sell a piece of news. Another possibility is a technical issue. In addition, there are many concerns about what applications will do if Ethereum is split once again. A hard fork can result in not just one Ethereum, but two or three. When this happens, what platform does your DApp run on? I believe the Ethereum merge is riskier than most people think.
The expert highlights the key distinctions between Bitcoin and Ethereum, taking a more comprehensive view of the economy. However, it explores the relationship between cryptocurrencies and the IT stock industry. According to Kelly:
It was too high. The Nasdaq to Bitcoin correlation is somewhere around 60%. The Nasdaq to Ethereum correlation is somewhere around 70% for the last 30 days rolling. Crypto, 2x leverage, triple Q ETF [borsa yatırım fonu] acts as effectively. I think there is some nuance here, Bitcoin itself is not a tech stock. It is definitely an alternative currency. It is digital gold. You need it when your country destroys its currency, as many governments do today.
According to Brian Kelly, Ethereum is a technology stock
Saying that Bitcoin is an alternative currency, the analyst says that Ethereum is a technology stake due to smart contracts:
Ethereum, on the other hand, can be thought of as a tech stock in a way because it would disrupt a lot of the things tech stocks do today. To the extent that it drives daily active users away from places like Twitter, Facebook, and Google, I think there’s something to be said for Ethereum to be a tech stock.
cryptocoin.comAs you follow, ETH is currently trading at $1,556.51.
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