EllioTrades

Share this post
The Ethereum Merge Is Coming – Bullish or Bearish?
www.elliotrades.xyz
EllioTrades Deep Dives

The Ethereum Merge Is Coming – Bullish or Bearish?

Oliver Grah
Aug 13, 2022
2
1
Share this post
The Ethereum Merge Is Coming – Bullish or Bearish?
www.elliotrades.xyz

Introduction

SpaceX launch photos: Historic NASA crewed rocket launch in images | Fortune

Yes, it’s finally happening: Despite years of delays and memes like the one below becoming routine, Ethereum is approaching a critical milestone: The Merge! In this article, we’ll shed light on this crucial event and what Ethereum’s transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) means for ETH and the broader crypto space.

Only a Few Weeks Until the Merge?

  • Yes, we have been talking about the Merge for quite a while on this channel – but expectations of an imminent launch have been pushed out time after time again. Is this time different? It certainly seems so since tomorrow the last testnet Merge is scheduled to occur before the real Merge comes next.

Twitter avatar for @parithosh_j
parithosh | 🐼👉👈🐼 @parithosh_j
The Goerli testnet will merge in the next ~2 days, this will be the last testnet to merge before mainnet. If you are running a Goerli node, please update and follow the numerous guides to ensure we can have a smooth merge. More information here: notes.ethereum.org/@launchpad/nod…
Image
8:57 AM ∙ Aug 8, 2022
506Likes133Retweets
Twitter avatar for @NorthRockLP
NRD @NorthRockLP
IMO the appropriate over under for Merge date is Sep 17th, with equal odds it occurs before vs after that date.
Twitter avatar for @evan_van_ness
Evan Van Ness 🦇🔊 @evan_van_ness
Do people realize that next week Ethereum is going to set the schedule for the Merge? https://t.co/UR5xyR7F5E
9:58 PM ∙ Aug 7, 2022
57Likes5Retweets
  • If you need a reminder of what the Merge is, check out this great summary by Bankless. 

The Bull Case

  • If you checked Crypto Twitter recently, you probably didn’t miss the bullish hopium spread by ETH supporters on a daily basis. In short, this meme does a good job summarizing the current sentiment:

Twitter avatar for @LilMoonLambo
theweeknd.eth @LilMoonLambo
THE ETHEREUM MERGE THIS YEAR COULD VERY WELL BE THE MOST BULLISH EVENT IN OUR LIFETIME AS ETH WILL MOVE TO PROOF OF STAKE, REDUCE ISSUANCE BY 90% AND REDUCE ENERGY CONSUMPTION BY 99.5% WHICH COULD START THE BTC FLIPPENING AND THIS IS HAPPENING NEXT MONTH
2:52 AM ∙ Aug 5, 2022
2,324Likes382Retweets
  • To further promote the bull case for ETH, let’s give the word to a few of Ethereum’s biggest advocates (or “ETH maxis” in other words 😉):

Twitter avatar for @sassal0x
sassal.eth 🦇🔊🐼 @sassal0x
The Merge, summarized: - The Ethereum network will be full Proof of Stake - 99.98% energy use reduction - 80-90% ETH issuance reduction - Staked ETH APY increases - ETH becomes net deflationary - No new ETH enters circulation until at least 6mo's after You don't own enough ETH.
2:37 AM ∙ Apr 7, 2022
3,307Likes613Retweets
Twitter avatar for @econoar
eric.eth @econoar
The merge will be a huge success. Layer 2 will scale Ethereum. The masses will realize ETHs monetary policy is best in class. ETH will flip BTC. It’s all inevitable but do you have the patience to wait and the conviction to withstand the FUD along the way?
3:33 AM ∙ Aug 1, 2022
2,034Likes261Retweets
Twitter avatar for @Swagtimus
Swagtimus.eth🦇🔊L2'22 @Swagtimus
Goldman Sachs are telling their customers about the Merge, Surge, Verge, Splurge, Purge What a time to be alive
Twitter avatar for @NorthRockLP
NRD @NorthRockLP
Goldman out with a Merge note today. Normies and institutions will soon come for our Merge assets. Beware and enjoy. https://t.co/CI2EXPIrD3
1:17 AM ∙ Aug 4, 2022
42Likes4Retweets
  • Jokes aside, it’s undoubtedly true that many people still have no idea what the Merge is and what a dramatic impact it will likely have on ETH as an asset.

Twitter avatar for @odin_free
odin-free.eth ✨🐺 @odin_free
99.999% of the world doesn't know about the Merge and what it'll do to Ethereum. Every year, $eth sell pressure drops by $8bn eth issued per year today: ~4’500’000 eth issued per year after Merge: ~600’000 Post-merge, we'll have ~negative issuance due to EIP-1559 burn rate.
8:25 AM ∙ Aug 9, 2022
58Likes11Retweets
  • While not anyone in the crypto community might agree, the fact that Ethereum will transition to a much more energy-efficient consensus mechanism will significantly impact Ethereum’s public perception as an “ESG-compliant” asset – which could prove to be an advantage over BTC when it comes to regulation and institutional investing.

Twitter avatar for @CryptoGucci
Crypto-Gucci.eth ᵍᵐ🦇🔊 @CryptoGucci
The Proof of Stake narrative for Ethereum keeps getting stronger and stronger
Twitter avatar for @BreakingCrypto0
BreakingCrypto @BreakingCrypto0
CFTC CHAIR: BITCOIN MINING HAS TO EVOLVE AND RECOGNISE THAT ITS ENERGY USE IS TOO HIGH. $BTC
6:54 PM ∙ Jun 9, 2022
68Likes6Retweets
  • Besides the energy efficiency narrative, Ethereum believers often connect the Merge with a concept called the “Triple Halvening.” Sounds bullish, right? Read the thread below to get an in-depth explanation of what the “Triple Halvening” is and how it might affect the ETH price after the Merge.

Twitter avatar for @Montana_Wong
Montana Wong @Montana_Wong
Ethereum is about to experience a once-in-a-lifetime phenomena called the "Triple Halvening" after the upcoming Merge. What this is, and how this will drastically affect every ETH holder 👇
6:18 PM ∙ Aug 8, 2022
4,182Likes1,223Retweets
Twitter avatar for @Data_Always
dataalways.eth @Data_Always
Why I'm bullish on The Merge.
Image
5:37 PM ∙ Aug 2, 2022
377Likes76Retweets

The Bear Case

  • While the Merge is a critical milestone for Ethereum and the broader crypto space, it will NOT offer a solution to all of Ethereum’s problems – notably the scaling issues plaguing the L1 blockchain. The Merge “only” marks the transition of Ethereum’s consensus mechanism from PoW to PoS.

Twitter avatar for @VitalikButerin
vitalik.eth @VitalikButerin
@barnabemonnot There have been so many "the merge will fix scaling" takes that I think we're not far away from EIP-1559 being dethroned from that status.
9:19 AM ∙ Aug 9, 2022
200Likes16Retweets
Twitter avatar for @NorthRockLP
NRD @NorthRockLP
In many ways the Merge will be an important step towards realizing ETH's full potential, all of which will be required for it to fill this role. However, the journey does not end the day we Merge. This is just one chapter in a story with many unwritten chapters.
11:30 PM ∙ Aug 8, 2022
  • Besides the fact that the Merge could go wrong (compare it to a space shuttle having its engines replaced mid-air), there are other significant risk factors – mostly of economic and systemic nature. Bankless does a great job summarizing these risks, and the potential chaos around the ETH Merge in their latest newsletter. The tldr is:

    • During the Merge, the Ethereum blockchain will be “hard forked” into two chains: the PoW and the PoS chain. Initially, this can potentially lead to quite a bit of chaos in DeFi land since stablecoins and liquid staking tokens (stETH, rETH, etc.) will fall to 0 on the PoW chain (they can’t be redeemed anymore). This will lead to a potentially considerable amount of volatility, liquidity movement, and MEV (Minter Extractable Value). Read more in this article to find out more about the potential chaos surrounding the Merge.

Twitter avatar for @BanklessHQ
bankless.eth @BanklessHQ
The Merge is coming™️ What's the biggest threat? It's not technical. It's economic. @0x_Lucas explains:
newsletter.banklesshq.comThe Biggest Threat to the Merge [LITE]The Ethereum Merge is coming and it could bring economic chaos
11:13 PM ∙ Aug 8, 2022
60Likes11Retweets
  • It’s important to remember that the Merge has a drastic impact on a key player in the Ethereum ecosystem: miners. Overnight their business model will drastically change…

Twitter avatar for @argentHQ
Argent @argentHQ
The Merge is happening. And it’s one of Ethereum’s most significant upgrades But many miners are unhappy about it This has led to the possibility of a Proof of Work chain on Ethereum after the Merge
Twitter avatar for @EliekfouriE
egk10.eth 🦇🔊🐼💚🔴 @EliekfouriE
Congratulations @laurashin for bringing to discussion one of the most important event that Ethereum Merge to PoS is. Hope you continue post more interviews about it with others points for view. https://t.co/7R1OIRorvK
3:19 PM ∙ Aug 8, 2022
Twitter avatar for @kaiynne
kain.eth (✨🔴_🔴✨) @kaiynne
Ok let’s say miners fork to a PoW chain. We then get two versions of everything, but a lot of DeFi on this chain will be in a weird limbo state. It will keep working in theory. But you will have like powDAI backed by powETH. Assuming liquidation bots operate that’s gonna be wild.
7:24 AM ∙ Aug 5, 2022
168Likes21Retweets

How to Position Around the Merge

  • Has the Merge been priced in by the recent pump, or is there more juice in the tank? Clearly, ETH has outperformed BTC in recent weeks…

Twitter avatar for @Route2FI
Route 2 FI @Route2FI
Both $BTC and $ETH are now 65% down from ATH. But more interesting: - $ETH is up 85% from the bottom - $BTC is "only" up 32% from the bottom The merge narrative running strong?
7:08 PM ∙ Jul 31, 2022
712Likes73Retweets
  • Who knows what the short term will bring, but what is clear is that traders are making big bets right now. If you want to gamble on a short-term pump (or dump after the Merge), be careful not to burn your hands… Avoid leverage and for a more hands-off approach, accumulate ETH during dips and hold it for the long term. If the Merge goes as planned, it should certainly have a BIG impact on Ethereum’s tokenomics and positively influence the ETH price in the long run.

Twitter avatar for @glassnode
glassnode @glassnode
For the first time in history, $ETH Options Open Interest at $6.6B has surpassed $BTC Open Interest at $4.8B. This appears to be a result of traders betting big with call options the Merge scheduled for mid-September. Read more in our latest analysis👇 glassno.de/3BNVq1d
Image
2:57 PM ∙ Aug 8, 2022
230Likes56Retweets
Twitter avatar for @laevitas1
Laevitas @laevitas1
👀ETH ATM vol term structure clearly pricing in some big moves for September coinciding with the merge.
Image
8:39 AM ∙ Aug 1, 2022
43Likes4Retweets
  • A possible short-term scenario could be: Run up until a few days/weeks before the Merge, then profit taking and derisking. If the Merge goes through smoothly, there could be more bullish price action (similar to BTC’s halvings which mostly show their bullish tokenomics effect after the fact).

Twitter avatar for @slurpxbt
slurp 〽️ @slurpxbt
so been thinking about this imo more and more people will realize merge is relativelly risky event and will decide to not hold eth into it does the eth money flow to btc 🤔
7:46 PM ∙ Aug 1, 2022
  • Many traders fear the Merge as a “sell the news” event. While this might certainly hold true, the FUD that ETH stakers will dump all their ETH right after the Merge is undoubtedly not factual. In fact, staked ETH will not be unlocked until at least 6-12 months after the Merge – and even then, a sudden drop is unlikely due to an unstaking queue.

Twitter avatar for @korpi87
korpi @korpi87
"ETH will dump hard when >12M staked ETH get unlocked after the Merge." I've noticed some people consider the Merge as a negative price catalyst due to a supposed huge ETH unlock. This is wrong. Here is what they miss about the $ETH unlock. 🧵👇
Image
11:48 AM ∙ May 23, 2022
1,554Likes413Retweets
  • Have been and will there be other ways to “play the Merge” besides holding ETH? Indeed – in recent weeks, tokens related to the Ethereum ecosystem benefitted from the broader market bounce remarkably.

Twitter avatar for @DefiantNews
The Defiant @DefiantNews
Ethereum Classic finds new life as the Merge fast approaches 🚀 $ETC has rocketed 174% since July 13, as investors and traders speculate that the Merge will redirect a significant portion of hashing power to the PoW chain. 🔗: @samuel_haig thedefiant.io/ethereum-class…
thedefiant.ioEthereum Classic Shakes Off the Dust and Rockets 174% - The DefiantVestige of Old Ethereum Finds New Life as The Merge Approaches
7:53 PM ∙ Aug 3, 2022
183Likes50Retweets
Twitter avatar for @0xSisyphus
Sisyphus @0xSisyphus
The best narrative for merge season was/is liquid staking The second best narrative has been the layer 2's, but it may just be a timing thing around Optimism incentives and Arbitrum Odyssey coming back
Twitter avatar for @0xSisyphus
Sisyphus @0xSisyphus
Ask yourself what goes up more than ETH if ETH goes up bigly into merge Long that
11:50 AM ∙ Aug 3, 2022
118Likes9Retweets
Twitter avatar for @AutomataEmily
Emily👁️(CFA,CAIA)Chartered Chain Checker @AutomataEmily
ETH Merge plan -Hold ETH in wallet for airdrops -Open account with exchange likely to list the airdrop...which ones though?
10:19 AM ∙ Aug 4, 2022
  • However, if you want to trade altcoins right now, be aware that this small wave of bullishness could end as quickly as it began as we find ourselves in the possible later innings of a macro bear market rally. And no, the Merge will not be enough of a bullish catalyst to withstand a potentially broader market crash…

Twitter avatar for @WifeyAlpha
Wifey @WifeyAlpha
You are seeing people starting to get emotional over the (small) possibility they could recover all losses from the bear market. The reason the market bids in bear market rally is due to 5/6
11:31 AM ∙ Aug 9, 2022
280Likes4Retweets
Twitter avatar for @WifeyAlpha
Wifey @WifeyAlpha
the market temporarily ending a “fundamental sell off” as technicals have become so stretched that they have taken over thus creating a technical rally. This is not a fundamental bid and thus needs to be acknowledged. The permabulls will try to convince you otherwise. 6/6
11:31 AM ∙ Aug 9, 2022
468Likes19Retweets
1
Share this post
The Ethereum Merge Is Coming – Bullish or Bearish?
www.elliotrades.xyz
1 Comment
𝐻 𝑋 𝐿 𝐿 𝑌 𝑊 𝑋 𝑋 𝐷 𝑉 𝐼 𝐶 𝐸 𝑆
Writes 𝐇 𝐗 𝐋 𝐋 𝐘 𝐖 𝐗 𝐗 𝐃 𝐕 …
Aug 13, 2022

Great piece Elliot!

In the latest edition of the HXLLYWXXDVICES monthly editorial, the publisher argues now is the time we “witness and allow.”

He does so via a couture model in Louboutins and a dead classical poet floats on down a French river?

Link to the August edition:

https://hxllywxxdvices.substack.com/p/hxllywxxdvices?s=r&utm_campaign=post&utm_medium=web&utm_source=direct

Expand full comment
ReplyCollapse
TopNewCommunity

No posts

Ready for more?

© 2023 EllioTrades
Privacy ∙ Terms ∙ Collection notice
Start WritingGet the app
Substack is the home for great writing