How to trade Ethereum after the Merge?

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The upcoming Ethereum Merge upgrade, scheduled to occur on 15th of September, will be regarded as one of the biggest events in the history of any crypto asset. Considering the popularity of Ethereum among market participants and with billions of dollars at stake, the entire crypto industry is keenly watching. In today’s article, we will briefly discuss the effects of Merge on Ethereum’s price. 

Impact of the Merge upgrade on Ethereum

Let’s look at the changes that occur on this upgrade. First will be the transition from the Proof of Work to the Proof of stake consensus, along with the merging of the Beacon Chain with the Ethereum mainnet. The completion of the merge upgrade will also set in the deployment of Sharding mechanisms to further improve scalability. Ethereum’s economic structure will also undergo an overhaul, with Ethereum becoming deflationary. As a matter of fact, Ethereum’s deflationary mechanism kickstarted with the EIP-1556 upgrade. Ethereum’s annual rate of inflation has already fallen by 50.77%, and expectations are that the completion of the Merge upgrade will cause a 90% reduction in the issuance of ETH tokens.

How much will the Merge impact Ethereum’s prices?

Ethereum has plunged below the $1,500 mark prior to the Merge although for a totally different reason. The fall in prices is being accounted to the whales moving their assets on the exchange with Fed’s hawkish stance on curbing inflation, and the overall increase in the prices in the global oil markets. Also, on August 26th, Ethereum saw $2.6 billion in options expire, causing the prices to tumble below $1,600 due to the liquidations. During the Merge, many exchanges might halt Ethereum deposits and withdrawals as a standard procedure. And there is also a possibility that Ethereum miners may dump all their tokens in the market rather than waiting for the Merge to happen.

How can traders trade Ethereum post the Merge?

While it is always good to keep a strategy at hand while investing, some pointers can help you chart out a clear route on how to judiciously take your investing/trading decisions with respect to Ethereum:

1. The simplest and most obvious strategy is to HODL. Just buy some Ether from a spot exchange and hold them in your wallet and wait for the hard-forked tokens to arrive after the Merge. Ethereum should be considered a long-term investment given its viability in the web3 world and beyond. History tells us that the value of the forked tokens has gone up post such events. Remember Bitcoin Cash touching $1,650 after the BTC and BCH split. 
2. Traders can hedge their ETH investments by going for derivatives trading. If not sure about where ETH prices will move, you can go long or short and opt for futures or options to cancel out their losses.  
3. If you are still skeptical about trading Ethereum close to the Merge, you can always go for stablecoins and wait for the strongest trend to emerge before you can invest in Ethereum. 
4. Keep abreast of the developments around Ethereum. While the Ethereum Foundation has already slashed rumors about the Merge causing the network capabilities to improve, experts predict that Ethereum prices may see a trigger since Ethereum will now become a direct competitor to other layer-1 scaling solutions. So ‘buy the rumor, sell the news’ can also be a good strategy to go for while trading Ethereum around the Merge. 

Investing in crypto assets remains a risky venture, and investors should consider investing only what they can afford to lose. Avoid impulsive trading at all costs as it results in poor judgment.

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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.