The Merge: Crypto traders are betting on the Ethereum merger to fail this Thursday at 8am

The final merge upgrade, Paris, will go live when the total terminal difficulty reaches 58750000 P. At the current hash rate, Ethereum will reach this important moment in 1 day 18 hours (Thursday around 8:00am). While many believe that the merger is an extremely bullish moment for crypto, crypto traders are hedging against the failure of the Ethereum merger.

How crypto traders view the Ethereum merger

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

Perpetual contracts allow traders to trade on the prices of an asset without actually owning that asset. Funding rates ensure that the price of that asset in the perpetual contract is tied to the actual price of the asset in the market. Funding rates are negative when there is a huge interest in the short position. In such a scenario, short trades earn interest for those 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 Ledger Prime’s Zaheer Ebtikar, the reason for short selling may not be the failure of the Ethereum merger. He believes that many traders are holding long positions in Ethereum in the cash market. Shorting ETH in the derivatives market could be a way to hedge risks.

Traders may also consider the technical difficulty of the merger. The merger will move Ethereum’s consensus mechanism from Proof-of-work to Proof-of-stake. This task requires great technical rigor. If something goes wrong, Ethereum’s prices will plummet.

The possibility of a hard fork can ruin Ethereum’s prospects.