On September 15th, the long-awaited Ethereum merging wilel finally take place. The move of Ethereum, the second largest cryptocurrency after Bitcoin, from a Proof-of-Work to a Proof-of-Stake model will be a major and keenly followed event in the crypto industry.
Ethereum’s energy efficiency will improve by 99% thanks to the proof of stake mechanism, which requires far less power to operate.
Trading strategies for Ethereum merging will be discussed. For your convenience, we have included some of the more widely-held hypotheses regarding the future value of Ethereum.
Hedging
When there is higher market volatility when Terra (LUNA) and other coins performed poorly on the cryptocurrency market, it is natural for people to feel anxious. In such cases, Hedging may be a viable choice for investors who are uncertain about the Merge.
Those who are long Ether since the recent $880 “bottom” may be protected from losses if ETH corrects sharply and obtains the PoW hard fork tokens by holding short positions in futures and options contracts.
“Buy rumors and sell news”
It is believed that when events transpire as anticipated, the market does not behave as anticipated. In such situations, the adage “Buy on rumors, sell on news” comes into play.
Joseph De La Vega, a diamond dealer and financial expert, discussed this topic in his 1688 book Confusion de Confusiones. Typically, news traders become active when a major news event is imminent or shortly thereafter, i.e. when the market is reacting to the news.
The core notion is that rumors surrounding a favorable news event result in buying, whereas the actual news is the reason for selling and taking profits.
This can be demonstrated using the current instance of Dogecoin. From its opening price of $0.004681 on 1 January 2021 to almost $0.73 on 8 May 2021, Doge, a cryptocurrency noted for its pumping in the era of meme stocks, increased by nearly 16,220%.
Elon Musk, CEO of Tesla, presented Saturday Night Live (SNL) on May 8, 2017 and referenced Dogecoin. After this, Dogecoin’s price plummeted to an all-time low.
Prior to this event, the price of Dogecoin reached an all-time high at one point. Two days later, on 10 May at $0.45, the price plunged by as much as 39%.
Ahead to the Merge, investors should anticipate greater volatility in the token’s price; nevertheless, individuals with a higher risk tolerance may wish to explore purchasing additional ETH now or one or two days prior to the Merge before taking profits.
Extended Bearish Trade in ETH
These factors suggest that Ethereum may be entering a negative trend:
- Generally speaking, riskier assets, such as technology stocks and cryptocurrencies, perform worse when the Federal Reserve consistently raises interest rates. Thus, it is also possible that ETH prices will continue to fall.
- Supporters of proof-of-work (POW) would be pessimistic about an Ethereum switch to proof-of-stake (POS).
- Concerns have been raised that Proof-of-Stake could be easier to centralize.
- The most recent events paint a bleak image, including stricter laws, the banning of several goods built on the Ethereum network, and an attack on Tornado Cash.
Investors can carry out the transaction by selling BTC or ETH, selling USD, and shorting ETH.
Also Read: Merge shadow fork issues give bears control of Ethereum.
The reasons why ETH might move upward after the Ethereum unification.
- According to the Ethereum Foundation, POS is around 99.95% more energy efficient than POW.
- Investments in future-growing assets are best made during bear markets. The cryptocurrency market has a history of extended bear periods, followed by robust bull markets.
- The likes of VISA and banks are mulling about the possibility of launching their own goods on the Ethereum blockchain.
- Given Ethereum’s infancy, there’s a great chance that this market will expand.
Make sure to start trading ETH with the best broker, Libertex
Proof-of-Work ETC and ETHW Exchange
The risk of trading Ethereum Classic (ETC) is comparable to that of being either bearish or bullish on Ethereum. Ethereum Classic is a hard fork of Ethereum. To facilitate distributed apps, ETC was released in July 2016. (DApps).
When the 15th of September rolls around, the hardware POW miners use will become obsolete unless they make the switch to another blockchain. It’s likely that ETC is the intended recipient.
If you don’t like Ethereum’s Proof-of-Work methodology, you should probably join the ETC community, as the Ethereum creator, Vitalik Buterin, has recommended.
This can be accomplished by a temporary “buy the rumor, sell the news” deal. This can be done through any of the following activities: holding ETC, mining ETC, purchasing ETC, or selling ETC.
If you’re looking for an alternative way to buy Ethereum Classic, consider buying Proof-of-Work ETHW instead.
“ETHW IOU” is another token that can be traded now. However, a higher level of risk is associated with it. More than seven markets allow trading of this cryptocurrency.
After the integration, it is expected that the “ETHW IOU” token will function as intended.
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