ETH core developers publicly declared a provisional date for the upcoming “Merge” event set for September 15 to 16, 2022,

September is a big month in the crypto space, a highly anticipated event- the merge is set to happen. Ethereum is upgrading its network from ‘proof of work to a ‘proof of stake consensus algorithm.

The merge is speculated by many to influence a bullish run in th crypto market, recent data collected by glass node, a blockchain intelligence firm, indicated that traders are extremely bullish for September, however expecting a bearish again in October.

Undoubtedly The Merge is the most talk-about event in crypto in the last few years, amassing attention from the media and various crypto big players. An upgrade of this size and scope is first of its kind, never been seen before.

Traders and Investors have positioned in long spot ETH, short futures, and long options waiting for the perfect time to enter the market and grab their share of what the merge is set to offer.

So how are traders preparing for the merge?

“Traders are placing directionally obvious bets for Ethereum, utilizing call options, and for the first time in history Ethereum options open interest at $6.6B is more than  that of Bitcoin which is at $4.8B.”Buying a call is a huge indicator of a bullish sign for traders.

A call option enables traders to purchase the cryptocurrency at a fixed strike price,

“Call options dwarf put options for size, with traders betting on ETH prices upwards of $2,200, with significant open interest even out to $5,000,” Glassnode reported. The massive buy-side demand for ether call options that fades up in late September has led to a “state of extreme bullish bias.”

In moving forward, the post-merge era is not looking great as October will be encountering a massive sell-off, and a period of backwardation is to be experienced within the market.

“suggesting traders expecting the Merge to be a ‘buy the rumour, sell the news’ style event, and have positioned accordingly,” Glassnode said.

“Buy the rumour sell the news: is the idea of capitalising on market upswings by opening a position on a rumour or event which could cause a shift in the markets. The trader will then close their position once the news has been made public or the project completed, often at a considerable gain.

Graphical Presentation of Buy the rumour, sell the news

With the public eyes on the merge, reports indicate demand for short calendar futures (3-month basis) are unveiling. It suggests that traders have eyes on the merge only, speculating upside, and a sell-the-news event after the fact.

Summing up “How are traders preparing for the merge”

Almost all the data suggest investors/traders see the merge primarily as a good time for price gain, and not the right time to buy and hold.

NOTE;

• The “Buy the rumour, sell the news” strategy can be risky as the event might not turn out to be what has been anticipated, that is, initiate a bullish run. so it’s advisable to make further analysis before taking a position.
• This strategy requires a trader to constantly observe market news and event update