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- Traders are shorting ETH as The Merge is set to arrive in a few days.
- These traders could simply be hedging risk.
- Meanwhile, the Ethereum PoW token ETHW is receiving a lot of attention as an airdrop is imminent.
Ethereum’s Merge is seeing heavy activity in the market, with many traders shorting ETH. Among the trading activity taking place is the fact that there is a bearish sentiment as seen in the derivatives market. The funding rates of perpetual futures contracts of ETH has fallen to its lowest since July 2021.
It’s an interesting development given the fact that The Merge is one of the most hotly anticipated events in the crypto market at the movement. Ethereum will transition to Proof-of-Stake, which has enormous implications for the network and the market. It appears that some crypto enthusiasts don’t see The Merge to have an unquestionable positive effect on the price of ETH.
It could also be that traders are hedging against ETH, simply to offset any risk that might come with any disappointment in the lack of a strong enough rally following the event. With the negative funding rate that is currently in place, short traders are paying high fees to maintain their position.
Funding rates are the payments made by traders to keep their contract price near the index price. Negative funding rates indicate traders are shorting, and vice versa. On the upside, with negative funding rates, it means traders can buy ETH futures contracts at a price lower than the index price.
Perhaps it could be that some of these traders are expecting The Merge to encounter some hitches. However, the testnet Merge’s have been roundly successful, with their integrations often resulting in a bump in ETH’s price.
Furthermore, there is no reason to think that the price expectation of short-term traders are indications of future price. These traders look to make their money in the short term, so the overall sentiment of Ethereum from the community at large is much more significant.
Ethereum PoW Airdrop Getting a Lot of Attention
The ETHPoW network, which will remain on the Proof-of-Work mechanism, is set to airdrop ETHPoW tokens to holders of ETH. There are many in the market who are taking advantage of this, so that they can make a little extra profit.
Users who want the ETHW token must have the ETH token on a supported wallet. They must also remove ETH liquidity from DeFi protocols.
However, not everyone is supporting the ETHPoW chain. Holders of stETH through Lido, for example, will not be recipients of the airdrop. Layer 2 scaling solutions like Optimism, Arbitrum, Polygon, and Avalanche also do not support the fork.