The highly-anticipated Ethereum upgrade has sparked a divide in how the crypto world has been preparing for it.
While retail investors have been reported to be selling the token, institutions are now more keen to buy it.
Trends are indicating that investors are now becoming more bullish as they are buying calls and selling puts. The trading firm B2C2 has reported that more Ether has been bought recently, yet BlockFi users have been selling more Ether as of late.
However, ETH’s price has dropped roughly by 8% the past week, which leaves market conditions uncertain to all types of investors. Both Bitcoin and Ethereum have been experiencing intense price volatility over the course of this past month, with both ETH and BTC prices dipping.
Matt Maley, chief market strategist at Miller Tabak & Co., points out that institutional investors are buying the ETH dip, and notes that retail investors are “getting a little nervous about another risk-off period for the markets.”
Adding to retail’s uncertainty, the U.S. Federal Reserve Chair Jerome Powell has pushed that the US central bank would continue to raise interest rates in order to restore price stability. In order to prevent further risks of inflation, “maintaining a restrictive policy stance for some time,” would be required, Powell noted this past Friday.
Researchers at business analytics solutions provider Enigma say that traders are anticipating a retracement following ETH price surges earlier this August, with an 8% gain. Earlier this July, the token’s price has been pushed up by roughly 50% as investors have warmly welcomed the possibility of what a Proof-of-Stake blockchain can offer.
Is it the right dip to buy?
Well, it's difficult to predict since both the recent events had short-term effects on $ETH$ETH options traders were bullish for September according to @glassnode, betting prices to be above $2.2k & are also careful about the typical sell-the-news. pic.twitter.com/zZb0vl9cuN
— Elite Crypto (@TheEliteCrypto) August 29, 2022
The Merge entails the transition of the Ethereum network from Proof-of-Work (PoW) to Proof-of-Stake (PoS), which would in turn make the network more energy efficient, while increasing transaction speeds and scaling capabilities of the network. After a series of stress tests and setbacks, the Merge is anticipated to activate on September 6, and will be completed between September 10 and 20.
Ethereum’s Merge has been in progress for about seven years, according to Ethereum co-founder Vitalik Buterin. Most recently, Ethereum completed its last test prior to the upgrade, following the discovery of a detrimental bug that would result in drastic data loss.
In terms of investment opportunities, some analysts predict that Ethereum would emerge to be the world’s leading cryptocurrency.
“After The Merge, Ethereum will have lower inflation than Bitcoin. Especially with fee burns, Ethereum will be deflationary while Bitcoin will always be inflationary. Although, with every halving, the inflation rate goes down,” pointed out Ethereum researcher Vivek Raman earlier in July.
However, sceptics say that ETH prices can plummet once a “sell-the-news” type event happens – where traders aim to sell once Ethereum’s upgrade starts.
Gas prices have been extraordinarily low on Ethereum in the last week
Even at these gas prices, $ETH will be deflationary after the Merge pic.twitter.com/7p7EZr1g5i
— Evan Van Ness 🦇🔊 (@evan_van_ness) July 12, 2022
Commentators are currently anticipating that impact from social media would determine ETH’s price volatility from the event of the upgrade.