It’s No Secret
My regular readers will know that I have not placed much hope in a Merge rally. I went short just below $2K during the recent pump. I have consistently opened new shorts at various levels since then. It’s not that I don’t see value or potential for ETH, but simply that I am honoring higher-level indicators. ETH has managed a fairly impressive run when you consider the environment. Had it not been for the current macro picture, I would have been a lot more bullish. However, as mentioned in a recent post, upside is very limited in a risk-off environment. Unfortunately, we are still at the stage of being classed alongside risk-on assets. This is partly true for many altcoins, but BTC and even perhaps ETH are in many ways in a class of their own. Since the inception of Crypto, the market has moved in tandem. We are yet to experience compartmentalization within the Crypto space. A scenario where BTC could drop, while other assets remained stable, and vice versa. A greater distinction within the space will eventually surface, but that will come as the market matures.
A Successful Merge
Well, at least the event went off without a glitch and everything appears to be running smoothly, at least to my knowledge. However, there was no pump whatsoever, which is what I was expecting, and set up trades accordingly. Another concern is the fact that only two addresses run almost 50% of all the POS nodes. Now that is some serious centralization, in my opinion. I don’t exactly know how anyone is able to look past that one! Solana has always been slammed for being too centralized, but this is exactly why I have chosen a few layer-1 blockchains. There is no perfect chain, and while ETH definitely holds the most promise at this stage, I wouldn’t rule out Solana or Avalanche securing a sizable chunk of the market.
The Next Few Months
I know the tokenomics make a fairly strong case for price appreciation, but I want to see how they actually play out in real terms. On top of that, I still anticipate further downside for all markets. This is probably my biggest deterrent at this stage. No matter how bullish something may appear, there are other factors at play that are way more significant and will ultimately dominate all markets, at least for now. Provided there are no further issues, I would be looking to go long on ETH once we experience the “final flush” that I believe is still on its way. Being an effective trader or investor requires that you stick to your guns, provided you have the data and confluence to back you up. There have been a number of calls of late, which have seen me being a tiny minority. However, I have been right, which is what counts. If you change your viewpoint based on the opinions of others, you will continuously be in a state of indecision.
I will be looking to cautiously continue shorting ETH. This is not specific to ETH but is more a case of the broader market. However, I have some ETH that I am using as margin, so I will continue to utilize it when the opportunity arises. Likewise, if there is a strong case for a momentary pump to the upside, I may well go long. I do however not want to get caught in a long position, as I believe confluence is suggesting further downside. Anyway, that’s where I stand when it comes to ETH. Thanks for the visit, see you next time!