Ethereal (ETH) price is set to be deflationary after the Merge due to the EIP-1559 burning mechanism. However, the ETH price continues to dive below $1500 even before the Merge.
Whales dumping their ETH holdings, Fed Chair Powell’s rate rise indications, and over $2 billion in options expiring on September 30 are the causes of the pressure.
With a predicted 90% decrease in ETH issuance following the Merge, Ethereum will turn into a deflationary coin.
According to data by on-chain platform OKLink, over 2.6 million ETH have been burned since the implementation of the EIP-1559 in August last year. The total ETH burned until now is worth over $8.5 billion. Also, the annual inflation rate of Ethereum has fallen 50.77% since the implementation of EIP-1559.
Additionally, whales are dumping their ETH holdings due to fears that Ethereum would become deflationary after the Merge. While exchanges’ holdings of Ethereum (ETH) have surged in August, non-exchange whales appear to be dumping their ETH holdings.
This indicates that whales are bearish on the price of Ethereum (ETH) following the Merge.
In truth, the post-Merge deflationary Ethereum price and the September 30 expiration of $2 billion in options are forcing traders and whales to liquidate their ETH holdings.
Two significant events occurred on August 26 for the cryptocurrency market: the monthly options expiry and Fed Chair Jerome Powell’s hawkish Jackson Hole address. Powell confirmed the Fed’s hawkish attitude on rate increases in the upcoming months, as was predicted. The market-wide sell-off, however, was primarily caused by the monthly expiry.
On August 26, options worth $1.27 billion on Ethereum came to an end. The price dropped below $1600, forcing traders to sell their positions. Now that $2 billion in ETH options are slated to expire after the Merge, the following expiry is probably going to see further liquidations. Additionally, the cost is already less than the $1600 maximum cost of discomfort.
The Ethereum (ETH) price is witnessing massive selling pressure below the $1600 level. The price has tumbled over 3% in the last 24 hours and over 7 % in the last 7 days. Currently, the price is trading near the $1450 level.
The Ethereum Merge is most likely to happen on September 15. The Ethereum network needs an average hash rate of 872.2 TH/s to achieve the TTD of 58750000000000000000000 on September 15. According to OKLink’s “Ethereum The Merge Countdown” data, the current hash rate is 876 TH/s.