The Ethereum network’s long-awaited transition from proof-of-work to proof-of-stake is set to take place between September 15th and 16th, and last year traders and analysts discussed the various consequences of the upgrade and possible trading strategies. have been discussing.
Let’s take a look at the three options investors and traders have.
Hodl ETH to Earn Expected ‘Hard Fork’ Tokens
The first strategy is relatively simple. A trader buys his Ether (ETH) on the spot market, holds it in his exchange wallet, or a platform/wallet that supports forked tokens, and waits for his expected PoW his token can do.
When Bitcoin forked into Bitcoin Cash in 2017, BTC holders received the same amount of BCH, which at one point traded at $1,650 per token. At the height of the 2021 bull market, BCH climbed to his $800 level.
When PoW tokens come from entities that choose to ignore merging, finding an exchange that supports hard forks will be the place to sell them. Don’t forget to pay taxes if your country requires it.
Once people realize that speed to market doesn’t matter in the face of centralization, censorship, and administrators, it’s too late.
Protocol-level censorship takes place. More Guardians Coming.
How much power do you think the US has over public companies?
— $ nadjritzcalod (@nadjritzcalod) August 16, 2022
It is also possible that the ETH PoW token will not pump and dump immediately. Many analysts have heard about the risks of centralization on the PoS Ethereum network. Assuming projects and developers are willing to build her DApps on the blockchain, his PoW ETH fork, led by a miner, could find favor.
Related: ConsenSys Executive Says Changes in Economic Design Will Affect ETH Value After Merger
ETH Long, Futures Short
Let’s say I’m a little skeptical about whether Ethereum will make the merge a success. Many people do.And then Bitcoin (BTC) lost all its profits for the year, Wonderland Money collapsed, Terra (LUNA) — now Terra Classic (LUNC), Celsius, Three Arrows Capital, and everyone else in this misery that afflicted everyone. after the yearit’s perfectly natural to be nervous about fundamental changes in the second largest asset on the market.
Hedging is an option for investors who feel 50/50 about the merger. We are holding from the ‘bottom’ of $880.
With Long Ether, holding a short position in a futures or options contract can prevent losses in the event of a sharp correction of ETH and hopefully a PoW hard fork token. This should further offset losses in spot positions.
The hope of making up for some of these ‘losses’ by earning unconfirmed PoW tokens will help crafty Merge traders sleep better at night, and perhaps help top things off with a profit.
Stay in a stablecoin and trade with the trend
For some investors, the risks of trying to trade Merge outweigh the rewards, and getting a “free” PoW hardfork token may not be a priority.
These investors may consider staying with a stable coin and trading direction, or the strongest trend that Ether shows. In this scenario, trade either daily breakouts and breakdowns or the way the short-term trend dictates. Many traders expect merges to buy rumors and sell news type events, Other traders expect the price to drop significantly after the merge is complete.
If this is your view, it is relatively easy to create and execute a strategy around this expected volatility if you are sitting in the stables. These traders will be able to buy his ETH post-dip if they are true believers, and there will also be price volatility in hard fork tokens when various of his PoW tokens are heavily traded on exchanges. There is a possibility.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.