Surge or Pure? Why Merge Can’t Save Ethereum Price From ‘September’ | Ethereum News

Options data, macroeconomic catalysts and technical signals suggest that Ethereum price decline is on the table despite the merger.

Ethereum’s native token, Ether (ETH), is not protected from downside risk in September after rebounding almost 90% from its lows of around $880 in June.

Much of the token’s upside move is attributed to merges, a technological upgrade that will make Ethereum a proof-of-stake (PoS) protocol, September 15. set for,

But despite posting impressive gains between June and September, Ether is still trading down nearly 70% from its all-time high of $4,950 since November 2021. Hence, the possibility of it going lower remains on the cards.

ETH/USD weekly price chart. Source: TradingView

Here are three Ethereum bearish market indicators that show why more downsides are likely.

sell ethereum merge news

According to data from Deribit, Ethereum options traders anticipate that the price of Ether will reach $2,200 from its current $1,540 level before the merger. compiled by glassnode, The price reaches $5,000 for some people, but the excitement looks flat after the POS switch.

There appears to be downside security demand among traders after the merge, which is indicated by the so-called “Options Implicit Volatility Smile” metric (OIVS).

OIVS shows the implied volatility of options with different strikes for a specific expiration date. Therefore, contracts out of capital usually show high implied volatility, and vice versa.

For example, in Ethereum’s September 30 option expiration chart, the stability and size of the smile helps traders assess the relativity of options and find out how the market is pricing in tail risk.

Ethereum OIVS for the contract expiring on September 30, 2022. Source: Glassnode

Thus, this indicates a large buy-side demand for ETH call options expiring in September, indicated by an upward slope of the volatility smile, indicating that traders are paying a premium for long risk. are willing to.

Analysts at Glassnode, citing the OIVS chart below, wrote, “Following the merge, Left Tail is pricing in significantly higher implied volatility, indicating that traders can post ‘sell-the-news’ put-option protections.” -Paying premium for the merger.” Call and Put open interest at different strike rates.

Ethereum OIVS for the contract expiring on October 28, 2022. Source: Glassnode

In other words, ETH traders are hedging their bets in case of a news sell event.

Hawkish Federal Reserve

More downside signals from Ethereum come from its exposure to macroeconomic events, primarily a quantitative tightening by the Federal Reserve.

Last week, Fed Chairman Jerome Powell repeated The central bank’s commitment to curb inflation, noting that they “must maintain it until the job is done.” In other words, Powell and his colleagues will likely raise interest rates up 0.5%-0.75% at its next policy meeting in September.

The recent rate hike has been bad news for the ETH/USD pair, considering the growing positive correlation between the broader crypto sector and traditional risk-indices against the prospects of a decline in cash liquidity. For example, as of September 3, the daily correlation coefficient between ETH and Nasdaq was 0.85.

ETH/USD and Nasdaq Daily Correlation Coefficient. Source: TradingView

Therefore, risk assets as well as Ether are more likely to fall, especially if the Fed moves up by 0.75%.

That giant ethereal “bear flag”

From a technical point of view, the ether is painting what appears to be a bear flag on your weekly chart.

Bear flags appear when price is consolidating more inside an ascending parallel channel after a strong downward move. They resolve once price breaks down from the channel and falls as much as the length (flagpole) of the previous downtrend, as a rule of technical analysis.

Ether tested the lower trend line of the bears flag as support this week. From here, the Ethereum coin can either rally to reclaim the upper trendline of the flag (~$2,500) as resistance or break below the lower trend line to continue its current bearish trend. .

related: ETH Price Outlook for Merge: Bullish or Bearish? , TheChartGuys Interview

Given the factors discussed above, the ETH/USD pair runs the risk of entering a bear flag breakdown phase in September, as shown in the chart below.

ETH/USD weekly price chart featuring a ‘Bear Flag’ setup. Source: TradingView

Therefore, ETH’s bear flag profit target for 2022 is near $540, which is about 65% lower than today’s price.

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

Leave a Comment