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ETH merge- Buy the rumor sell the news????


Hi all,

It looks like the transition for Ethereum from pow to pos will occur in September. This is very good news for ETH and also, I believe, for the crypto market in general. There are plenty of articles, including on Publish0x, that discusses this process and the broader benefits. My purpose in writing this article is to share my thoughts on what I see written a lot, and that is the idea people buying ETH now with the idea they'll sell their ETH when the merge occurs. 

This can be a valid investment strategy as the markets tend to be forecasting vehicles with prices reflecting future expectations. In the case of the ETH merge I consistently see the view, or at least the question. of will people dump their ETH at the time of the merge, and my sense is this is already reflected in the price of ETH, all things considered. That is, if there is a surprise, it's how well ETH does post merge and people have to buy the news, or in this case the fact of a successful merge, and chase the price action. Now again, this is but a guess, but just like most were bullish on crypto last November and were dead wrong as we headed into a bear market (and congrats on surviving it if you are still interested in this space!), the idea that we'll have a sell off of ETH post merge seems to be consensus, or at least a common concern.  

Then today I came across a wonderful article by Arthur Hayes which I have linked below (it's publicly available and free to read, as well as you can subscribe to his posts if interested) where he lays out the case that ETH is actually suppressed currently due to hedging and may actually surprise on the upside post merge. I encourage you to read it just to see a well thought out counterpoint to current consensus of "buy the rumor, sell the news". I won't go into it as it's his research but I found it interesting as it supported the hunch I've had on ETH and the upcoming merge. 

Now, that being said there are plenty of macro events that could drive ETH and all risk-on markets down, such as worse inflation news, and expanding war or new conflicts, and so on, but as you can see, the markets can and do at times climb "a walls of worry" as they look past the current climate to what may be occurring 6-12 months out. And we can see some positives starting to emerge such as calming of covid (or at least our ability to deal with it), a dropping rate of growth of inflation (and that is what is measured by inflation, the rate of change not the current nominal value), the slowing economy leading to the potential of less hawkish government increases in interest rates (I don't think I'd count on an actual reduction in rates any time soon!), and more effective supply chain usage could all be positive news. 

We don't know what we don't know, and their can always be negative surprises out of the blue, but if what is known doesn't get worse, or actually improves, we could have another leg left this year to the rally we've seen in risk-on assets. Like the Fed, we pretty much need to be current condition focused, but I would encourage you to at least consider that if the Merge is successful for ETH it may be one of the more important events to effect crypto in years. Perhaps it's a buy the rumor, buy the news event....we shall see! But again, the macro events waves the tail of crypto right now, so do your own research and understand your own time horizon and risk tolerance, and that you can control only what you can control. My overall view is that Ethereum is one of the best positioned cryptos in the industry, and therefore is deserving of a position in any long-term crypto investment portfolio (and that view may be adopted by outside crypto investors eventually also!). My opinion and not advice ;) 

Thanks for reading the article and may you be safe and well! And may we all prosper! 

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Let us spread the wealth
Let us spread the wealth

Let us see what this grows into!


The nature of investing and life
The nature of investing and life

My posts will range from overall broader viewpoints on crypto and life and even Buddhism, something I practice every day. My hope is that you benefit is some way from my sharing, but more important I'm doing this because I enjoy it. Find your joy and support others in exploring theirs! As always, buyer beware, do your homework, only invest in the beginning what you can afford to lose, and let time be on your side. May the crypto be with you ;)

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