Crypto Traders Are Betting On Ethereum To Fail The Merge

The Ethereum Merge is less than 2 days away from being completed. The current difficulty is 58617786 P and the hash rate is 857 TerraHashes/sec. The final merge upgrade, Paris, will go live once the total terminal difficulty reaches 58750000 P. At the current hash rate, Ethereum will reach the milestone moment in 1 day 19 hours. While many believe the merge to be an extremely bullish moment in crypto, crypto traders are hedging against Ethereum to fail the merge.

How Crypto Traders See The Ethereum Merge

Reports highlight that traders are shorting Ethereum in the derivatives market. The funding rate for perpetual contracts for Ethereum reached its highest negative value since July 2021. Perpetual contracts do not expire, instead, they use funding rates to maintain the leveraged position.

The perpetual contracts allow traders to trade on the prices of an asset without actually owning the asset. Funding rates ensure that the price of that asset in the perpetual contract is tethered to the actual price of the asset in the market. Funding rates are negative when there is an enormous interest in the short position. In such a scenario, short trades pay interest to those who are holding long positions and vice versa.

The high negative value of Ether reveals that traders are extremely interested in shorting Ether.

Why Traders Are Shorting Ether

According to Zaheer Ebtikar of Ledger Prime, the reason for shorting may not be an Ethereum merge fail. He believes that many traders are holding long positions on Ethereum in the spot market. Shorting ETH in the derivatives market could be a way to hedge risks.

Traders may also be factoring in the technical difficulty of the merge. The merge will shift Ethereum’s consensus mechanism from Proof-of-work to Proof-of-stake. The task requires a lot of technical rigor. If anything goes wrong, Ethereum prices will plummet.

The possibility of a hard fork may ruin the prospects of Ethereum.