Over the past 24 hours, Ethereum has set new price levels, hitting $2,000 for the first time since May. The second largest cryptocurrency is up 5% following a run of positive price performance.
Since the start of July, Ether’s price has been rallying for some time. As a result, the value of Ether has gained close to 100% over the past 40 days.
Ethereum is bracing for the launch of the much-anticipated Merge Upgrade, scheduled for September. The Upgrade will see the network transition to a Proof-of-Stake (PoS) protocol from the Proof-of-Work (PoW) protocol.
Ethereum’s Merge-Inspired Price Rally
The recent price surge was triggered by the upcoming Merge Upgrade, which will be live next month. This positive sentiment is expected to last until the Ethereum development team announces the Merge.
According to Glassnode, for the first time in the network’s history, interest in ETH options has overtaken BTCs. ETH Open Interest is $6.6 billion compared to BTC’s $4.8 billion. However, this is the handiwork of traders who bet big on call options following the announcement of the Merge launch.
After completing the Goerli testnet, the network was in a bubble as investors became confident of its success. The Upgrade will reduce the often-debated high gas fees and other platform scaling.
Moreover, the king of altcoins is gaining interest as investors are upbeat about a future price rally. Outflows from the exchange are becoming low, and demand for the token is rising as the Merge draws near.
Interestingly, investors are becoming more attracted to trading asset derivatives over Bitcoin. From all indications, the open interest in Ethereum is set to surpass its all-time high set in November last year.
Most investors place high expectations on values up to $2,500, so the Merge has primarily influenced the tokens’ performance.
Should Investors be Cautious of the Next Turn?
According to data from the derivatives market, Ethereum’s traders braced for a possible price drop after the Merge. Glassnode experts believe this post-event will make headlines after what seems like a perfect beginning.
Data shows that the September Merge fever overtook the Option Interest as the price surged to $2,200. It is worth noting that a month after the announcement of the schedule Merge, the demand for options falls drastically.
This also points to the fact that traders are willing to trade the downside for more excellent protection to hedge their positions. The strong rally was sudden, albeit brief. According to experts, traders are banking on the “sell-the-news” option for protection post-Merge.
Ethereum’s co-founder, Vitalik Buterin, noted that the Upgrade’s value is yet to be determined by the team. All attention has now shifted to how the network handles the post-Merge situation.
The transition to PoS will leave miners jobless, leading to their grievances. For their part, the miners are looking to develop a clone of ETH PoW to continue mining. The proposed new fork will have negative impact on the network as public support harms Ethereum’s success.
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