The Ethereum blockchain’s long-anticipated shift from the Proof of Work (PoW) algorithm to Proof of Stake (PoS) is due to take place between September 15 and 16. Being dubbed ‘the Merge,’ this event is the first of its kind and the most significant update in the history of Ethereum. This massive change will no doubt have a noteworthy impact on ETH’s value. 

Soon after the Merge is over, the ETH network will start incorporating Sharding – another scaling solution. Ethereum’s co-founder Vitalik Buterin says that the transition will be only 55% complete with the Merge. In his words, the completion will happen in 5 phases, namely: The Merge, The Verge, The Purge, and The Splurge. While the names may seem simplistic and well-rhymed, there is a proper breakdown of what each stage means for ETH. However, our discussion today is concerned with how to go ahead trading ETH post the Merge. 

 Crypto traders have been strategizing for a while to deal with the volatility that is bound to arise during and post the Ethereum Merge. As a precautionary measure, many exchanges may even halt ETH trading during and after the Merge happens for some time. But that’s a standard protocol to be followed each time a transition of such a level takes place. For instance, exchanges halted BTC trading when BTC hard-forked into BTC and BCH (Bitcoin Cash). 

For beginners, trading in ETH might seem a little too complicated right after the Ethereum Merge. That is why in this post, we bring to you some investing tips to trade in ETH after the Merge.  

But first, let’s try to understand the possible effects of the Ethereum Merge on the crypto economy. 

What Effects Might the Ethereum Merge Have on the Crypto Economy?

The Merge will signify the end of ETH mining, of course. The new consensus algorithm- PoS- will bring a new set of implications for the Ethereum blockchain, as well as the broader crypto economy. 

According to Lex Sokolin, the head economist at ConsenSys, the effects of the Merge won’t really be felt greatly by the average user. In fact, users would be able to use the transformed chain more or less in the same way they had used the old chain. What’s more, users would have the added benefit of staking ETH with reduced risks.

As Sokolin put it, “Right now, staking on the beacon chain carries the risk that the Merge doesn’t happen. But once it does, participation in staking is more accessible and has less technical risk.”

Sokolin further clarifies that the Ethereum Merge will not lower the Ethereum gas fees or bring solutions for massive throughput just yet, contrary to popular belief. What the Merge will do, instead, is create a way for these changes to take place in the future. The Ethereum Merge will further act to alleviate the ESG impact of the Ethereum blockchain. 

And how will the Merge affect the value of ETH? Sokolin seems to think that any and all technical developments will affect Ether’s price one way or another. The crypto-economic changes the Ethereum Merge brings to the blockchain will surely impact the supply and value of the native asset. However, “…how the market ends up pricing those relative to broader macroeconomic events is yet to be seen”, says Sokolin.

Crypto Trading Tips to Trade ETH After the Merge

Here are some crypto trading tips for investors to trade the upcoming Ethereum Merge:

• Hodl ETH to Get the Hard Fork Tokens

This one is really simple – all you need to do is buy some ETH in the spot market and hold it in your exchange-provided wallet or any platform or wallet that will support forked tokens. And then, you wait for the expected PoW tokens.

Now, what is a hard fork? A hard fork is a permanent divergence from the current version of a blockchain, which would create a new blockchain. Some nodes from the older blockchain might no longer meet the consensus, which would imply that there are two different versions of the primary blockchain network operating separately. 

The Merge is a hard fork since it will mark the end of the Ethereum blockchain governed by Proof of Work and move over to a new one governed by Proof of Stake.  

Back in 2017, when Bitcoin was forked to Bitcoin Cash, every user holding BTC had received an equivalent amount of BCH. At one point in its history, BCH had even traded at $1650 per token. What’s more, during the 2021 bull market, BCH had gone up to $800. 

This time, expectedly, some ETH miners have come together to ask for a hard fork that would result in the creation of a new token that will stay on the PoW chain. A lot of the popular exchanges have also announced their support for the Ethereum hard fork and the trading of the resulting tokens, namely BitMEX and Poloniex. This makes hodling ETH for the hard fork tokens a viable strategy. 

• Long ETH and Short Crypto Derivatives

This crypto trading tip is for investors who are not entirely sure the Merge will prove to be a success, especially during the current bearish crypto market. You can long trade Ether while also holding a short position in crypto derivatives like futures or options contracts. This would allow you to hedge against losses if ETH plunges right after the Ethereum Merge and also give you time to acquire the PoW hard fork tokens, which would be enough to cancel out the losses you might suffer on the long spot position. 

• Stick to Stablecoins and Trade the Trend

If the risk of trading the Merge seems too much for you, you can just choose to stay in stablecoins and trade the strongest trend ETH will present at any given moment. In this case, you would have to trade daily breakouts or breakdowns, or whichever way the present short-term trend directs. 

• Sell the News, Buy the Rumor 

The impact of the Merge upgrade on Ethereum’s prices remains dicey. However, some factors like Ethereum miners dumping their tokens right before the PoS shift, the exchanges halting the trading for a prolonged period, or even the hype and anticipation around the upgrade may cause Ethereum prices to see-saw.

The ‘buy the rumor, sell the news’ strategy is a popular tactic in financial markets. We already saw the ‘buy the rumor’ bit when Ethereum touched $2k with the traders attempting a hodl, thinking that the Merge will cause Ethereum network capabilities to improve. The rumor was slashed later on by the Foundation itself. 

Experts expect the successful implementation of the upgrade can cause a major trigger in Ethereum’s prices, largely because Ethereum will emerge as a direct contender to the PoS blockchains after the Merge. Ethereum’s TVL and the number of developers already working on its network give it an edge over others. So traders need to first keep abreast of the developments around the Merge, avoid FOMO, and consider a long-term investment strategy for Ethereum. 

And there you have some crypto trading tips you can consider while trading ETH after the Merge! Keep in mind, though, that every crypto trading move you make will involve risks to varying extents, and therefore it’d be wise to do your own thorough research before making a trading decision.

We wish you good luck in your crypto trading ventures!