The highly-anticipated Ethereum merger is one topic that all hardcore crypto aficionados are talking about.
ETH currently trades below the $1.6K level
Ethereum price nosedives by 1.24% or trading at $1,570.76
ETH liquidations trigger price spike
Investors are debating whether or not the price of Ethereum will reach $3,000 since it is on everyone’s mind and a topic of conversation.
When the Ethereum Blockchain and Beacon Chain fuse together on September 22, 2022, the Ethereum Blockchain will switch from Proof of Work mechanism to Proof of Stake.
As a result of this shift, Ethereum miners will use significantly less computing energy. That will lessen the impact on the environment and soothe some of the concerns about cryptocurrency.
Since hitting a record high price of $4,868 in November 2021, Ethereum has been slipping under a declining resistance line. Even as we went to press, ETH was trading below the $1.6k level and had experienced a new 2% fall.
According to CoinMarketCap, ETH price has dipped by 9% in the last seven days, and trading at $1,550 as of this writing.
Ethereum Liquidations Trigger Price Spike
Traders’ skepticism of Ethereum is high during a week of trading that has been extremely erratic. The majority of investors have sold short (shorted) across exchanges for the first time since June 2021.
Notably, the funding rate drastically decreased on August 28 and 29. In fact, on August 31, even as we went to press, the rate remained stable.
A negative number meant that long traders were compensated more than short traders for holding onto their positions.
However, traders shouldn’t really give up because, in the past, such events have resulted in a price increase.
Price increases were common in these scenarios historically. A U-turn could be seen in the average financing rate, which stood barely above the $0 level, as it did at the time of writing.
Similar to how ETH might experience a price spike while the market is still too leveraged and liquidate a sizable volume of short positions.
More short positions are washed down as a result of these liquidations, which raise the price even higher.
Surge In Open Interest Validates ETH Popularity
However, not everyone believed that ETH would be able to get beyond the formidable $1.6k resistance barrier. As noted by renowned analyst Lark Davis, it actually coincided with the (potential) short-term decline.
Unquestionably a pessimistic narrative just before the Merge. Despite this, ETH’s demand won’t completely disappear overnight.
While Bitcoin investment goods witnessed a 7.16% decline to $17.4 billion in August, Ethereum investment products saw a gain of 2.36% to $6.81 billion in assets under management (AUM).
Furthermore, open interest is still surging in the options market, indicating that market participants are very interested in ETH.
BTC total market cap at $188 billion on the daily chart | Source: TradingView.com
Source: Nenad Novaković – Unsplash, Chart from TradingView.com