Investors have developed their own strategies to manage the volatility that could result from the Ethereum merger. Here are a few to consider.
The long-awaited transition of the Ethereum network from Proof-of-Work to Proof-of-Stake is scheduled for September 15-16, and over the past year, traders and analysts have been discussing various results of the upgrade and possible trading. strategies.

Let’s look at three options that investors and traders have.

Hodl ETH to earn the anticipated “hard fork” token
The first strategy is relatively simple. Traders can easily buy Ether (ETH) on the spot market and store it in their exchange wallet or any platform/wallet that supports fork tokens and wait for the expected PoW token.

Back in 2017, when Bitcoin was split into Bitcoin Cash, BTC holders received an equal amount of BCH, which at one point was trading at $1,650 per token. At the peak of the 2021 bull market, BCH rose to $800.

If PoW tokens happen to be in the possession of these organizations that have chosen to ignore the merger, then if they find exchanges that support hard forks, this will be the place to sell them. Remember to pay taxes if your country requires you to.

There is also a possibility that ETH PoW tokens will not be pumped and dumped immediately. Many analysts talk about the risk of centralization in the Ethereum PoS network, and while it may seem far-fetched, a miner-led PoW ETH fork could pick up steam if projects and developers want to run DApps on the blockchain for assembly.

Related: Economic Design Changes Will Affect Post-Merge ETH Value, ConsenSys Chief Says

Long ETH, short futures
Let’s say you’re a bit skeptical about a successful Ethereum merger. Many people. And after that hellish year when Bitcoin (BTC) lost all of its annual profits, Wonderland Money collapsed, and Terra (LUNA) – now Terra Classic (LUNC), Celsius and Three Arrows Capital – all suffered heavily, it’s completely natural. , because nervous about fundamental changes in the market’s second-largest asset.

Hedging is an option for investors facing a 50/50 merger. This will essentially be long Ether, which many holders naturally are and have been for years, or at least from the recent $880 bottom.

While Ethereum is long, holding a short position in futures or options contracts allows you to protect yourself from losses if ETH corrects sharply, and hopefully get PoW hard fork tokens that should further offset losses in your spot position.

The hope of recouping some of these “losses” by acquiring unconfirmed PoW tokens could help shy merger traders sleep better at night and possibly close the deal profitably.

Stay in stablecoins and just trade with the trend
For some investors, the risk of trying to trade a merge outweighs the reward, and getting “free” PoW hard fork tokens may not be a priority.

These investors might consider just staying in stablecoins and trading direction or Ether’s strongest trend. In this scenario, you can either trade daily breakouts and breakouts, or whatever the short-term trend dictates. Many traders expect the merger to be a hearsay buy and news event, while others expect the price to drop significantly once the merger is completed.

If that’s your point of view, then it’s relatively easy to strategize and execute that expected volatility when it’s stable. These traders can then buy ETH after the dip if they really believe, and if various PoW tokens raise large sums on exchanges, hard fork token price fluctuations could also be replicated.

The views and opinions expressed here are solely those of the author and do not necessarily reflect those of Every investment and trading move involves risk, so you should do your own research when making a decision.

Source: CoinTelegraph