Ethereum prices were higher this week by around 7% and left Bitcoin in its wake, with the latter down almost 1%.
Due to the September 15 Merge upgrade, Ethereum (ETH) has been seeing a strong rise in futures open interest. The project’s blockchain will switch from a Proof of Work chain to a Proof of Stake one, and that will mean a 99% lower energy usage.
Some miners will be forced to leave the chain as their mining rigs only work on the PoW chain and many investors have been getting in ahead of the upgrade with hopes of a price rally.
Recent data from The Block puts Ethereum futures open positions at a value of $9.15bn, up from less than $5bn at the end of June. That would be a risk if the update is delayed, or if investors are disappointed. The project has already debunked hopes for lower gas fees and faster speeds. That could leave the coin vulnerable to further losses, and there is the risk that there is further weakness ahead in stocks and commodities.
"The merger is a change in consensus mechanism, not network capacity expansion, and will not result in lower gas fees," developers wrote in a blog post.
Investors should watch the daily action carefully in Ethereum as the coin is looking to get back above $1,600. Larger resistance is ahead at the $1,750 level, and a failure at either of these, coupled with weakness in the broader market, could open up a short opportunity.
The estimated date for the merger is September 15, and that would also be a key time to look for price action setups. The key support levels in ETH are at the $1,300 and $1,400 levels.