Ethereum Merge Is Crazy Scary

There is almost no single upcoming event in the crypto world more important than the upcoming ‘Merge’ for Ethereum ($ETH.X). The ‘Merge’ transitions Ethereum from a Proof-of-Work (PoW) network to a Proof-of-Stake (PoS). After the conversion, ETH is anticipated to be more accessible, efficient, and scalable. 

But from a price action perspective, it could be disastrous. I’m taking a devil’s advocate approach here. While I believe that the upgrade is great for Ethereum’s ecosystem and the broader cryptocurrency environment as a whole, I believe the after-effects could be disastrous for its price. 

Remember about all those people who locked up their ETH?

I am going to water this entire thing down as much as possible, probably to the point where the trollololol fan bois are going to post things like, ‘EHRMEGURD DUR STOOPIDS DOESN NO WUT TALKING ABOOT.’

There are/were a number of steps to completing the switch from PoW to PoS. One of the first steps was to get enough people to commit to supporting the switch to PoS. ETH needed enough validators, and you could only be a validator if you could commit 32 or more ETH. 

OR

If you didn’t have 32 ETH yourself, you could form a club of your besties and pool together your ETH and create a staking pool. 

But here’s the catch:

That ETH is locked up until the switch to PoS is complete. Which is slated to ‘finally’ be done on September 15, 2022. Sounds great, right? If you’re a long-term investor or a hedge fund, this doesn’t phase you. If you’re a normal person, let’s take a look at the hell you’ve had to go through:

It’s Like Watching Your Pet Die Behind A Glass Cage, And There’s Nothing You Can Do About It

Imagine you’re one of the lucky few who bought Ethereum in November 2020, let’s say, at an average of $500. You feel good. You think, ‘Won’t take long for the Merge; I can afford this.’ You think ETH will be 1,000x, so risking money you can’t afford to risk will pay off soon, the Merge isn’t too far away right?

Six months roll by, and it’s now May 2021. You are high on your genius investment. Your $500 ETH gained almost 800%. 

Summer of 2021 passes. Ya, there was some anxiety, but you dealt with it. You convince yourself you have bawls of steel – easy to say that when you can’t touch your ETH. 

November 2021 hits, and your $500 ETH from a year ago is up almost 1,000%. Not only are you a God-damned genius, but you’re probably the next Warren Buffett. 

Enter January 2022. Shit. You want to sell. You remind yourself, “OMG I CAN’T! ALL THOSE GAINZ!!! <sad emoji sad emoji sad emoji>.”

Imagine if you are/were one of those ETH hodlers, stuck in a position you can’t get out of. Maybe you’re doing just fine, but a lot of people are not. They’re thinking, ‘when is this going to end?’

Eight months of hell, eight months of losses. You can’t get out. You’re stuck. You’re no longer up 1,000%. 

It’s June 2022, and you end the month with your ETH slightly more than double what you paid for it. Nice gains in any market, but all you can think about is the what-ifs and the misery of watching all those gains go down the tube.

Buy the rumor sell the news is something that occurs in the crypto space, too, so the anticipation of some selling when the Merge is complete is already a concern. Couple that with the trapped validators, many of whom want to GTFO ASAP, and you have a recipe for some crazy volatility and probable selling pressure.

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Can you give us a brief intro on who you are and what VanEck is for those who are unfamiliar?

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My father started the firm and is best known for creating the first gold fund in the United States in 1968, which led to our breakthrough. At the time, gold was pegged to around $35 an ounce and had been pegged against the dollar, not for just a couple of months but the entirety of US history—almost 200 years. 

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Speaking of Bitcoin, let’s get right into that discussion. What role do you see Bitcoin playing in a portfolio?

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