Popular trader predicts ‘Pump and Dump’ for Ethereum
As it will enhance the blockchain after the Proof-of-Stake (PoS) changeover, it is anticipated that the next Ethereum (ETH) Merge update will spark a surge in the value of the cryptocurrency.
A portion of the cryptocurrency market is concerned about the probable entrance of new Ethereum tokens into the ecosystem, despite the high level of optimism around the upgrade.
In this line, a prominent crypto trader blogging under the moniker Tradersweekly on TradingView suggests that one of the immediate effects of the Merge will be to start a pump-and-dump situation in Ethereum, particularly with the distribution of tokens from the previous Proof-of-Work (PoW) protocol.
The trader observes that freshly produced tokens will be dumped into the market in conjunction with the Merge. The dealer recognised that the price of Ethereum will rise, but that the situation is transitory.
“Because of these ‘out of thin air’ tokens, we anticipate an initial boost in Ethereum’s price” (especially before the Merge). “However, we anticipate that any possible price increase will be short-lived and that freshly produced tokens would be dumped on the market alongside Ethereum following the Merge,” the trader stated.
The trader also stated that technical indications indicate to very low liquidity in Ethereum, which supports the pump-and-dump scenario. In this instance, the expert predicted a loss of between $1,000 and $900.
A third crypto trader identifying as Mihai Iacob is positive on Ethereum, stating that the asset has outperformed Bitcoin (BTC) during the last two months.
“Technically speaking, the region between $1,300 and $1,400 represents really solid support at the moment, and the removal of selling pressure from BTC would almost certainly result in an increase to $2,500 for ETH,” he added.
The majority of the optimistic mood around the upgrade stems from the assumption that Ethereum will become less inflationary after the event and enhance its reputation as a store of wealth.
Notably, numerous industry analysts have remained dubious about the upgrade’s overall effect. According to Finbold, Antoni Trenchev, co-founder of the cryptocurrency loan company Nexo, said that there is no assurance that the Merge update would fuel an Ethereum rise.
According to Trenchev, the future performance of the second-ranked cryptocurrency by market capitalization will depend on Merge’s first success.
Despite the bear market, Ethereum has made gains, trading at $1,700 with a 24-hour increase of almost 5%.