One topic all crypto geeks are interested in is the much-anticipated Ethereum merge.
- 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.
Beacon Chain and Ethereum Blockchain will fuse on September 22, 2022. The Ethereum Blockchain will change from Proof of Work into Proof of Stake.
This shift will result in Ethereum miners using significantly less computing power. It will also reduce environmental impacts and address some of the fears about cryptocurrency.
Ethereum fell below a falling resistance line since hitting an all-time high of $4,868 on November 20,21. ETH had fallen 2% since we published this article. It was still trading at $1.6k below its peak.
Source: CoinMarketCap
CoinMarketCap says that the price for Ethereum dropped by 9% within seven days. It is now trading at $1.550, as of writing.
Ethereum Liquidations Spike Price Trigger
Traders’ skepticism of Ethereum is high during a week of trading that has been extremely erratic. The vast majority of investors sold short across all exchanges, for the first time since June 20,21.
The August 28 and 29 funding rates were markedly lower than usual. In actuality, even though the press release was going out, August 31 saw a significant decrease in funding rates.
An negative number indicated that traders holding on to their positions were given more compensation than traders with longer terms.
However, traders shouldn’t really give up because, in the past, such events have resulted in a price increase.
In these situations, price rises were not uncommon in history. One sign of a U-turn was the average financing rates, which were barely above $0 as at the time it was being written.
Similar to the way ETH may experience a price surge while its market leverage is too high and it liquidates a large volume of short position.
As a result, these liquidations cause more short positions to be dissolved which in turn raises the price.
ETH Popularity Validated by Surge in Open Interest
However, it was not believed by everyone that ETH could break the $1.6k barrier. Lark Davis, a renowned analyst noted that it coincided with the (potentially) short-term drop.
There was unquestionably a pessimistic story just before the Merge. Despite this, ETH’s demand won’t completely disappear overnight.
Bitcoin investment goods suffered a 7.6% drop to $17.4billion in August. Ethereum investments products experienced an increase of 2.36%, to $6.81billion assets under management.
In addition, the open interest market for ETH continues to grow, indicating market participants’ high level of interest.
Source: TradingView.com| Source: TradingView.com Source: Nenad Novaković - Unsplash, Chart from TradingView.com