On Thursday at 6:43 UTC, the long-awaited Ethereum (ETH) Merge happened!
It was an enormous undertaking. The blockchain protocol went from proof-of-work to proof-of-stake.
“The metaphor that I use is this idea of switching out an engine from a running car,” commented Justin Drake, a researcher at the Ethereum Foundation.
We’ve been looking forward to the Merge here at Winning Investor Daily for years. And we wrote about it all of last week too.
First, Ian gave you the rundown of everything to expect in his weekly techonomic essay here.
And then he rereleased a timely video on everything you needed to know about ETH 2.0 here.
That’s why, for this week’s Reader Appreciation Day, we’re diving into all things Ethereum.
Ian is answering your questions about the Merge, when you should have bought and what to expect going forward.
ETH 2.0 Mailbag
(Responses have been lightly edited for clarity and length.)
What impact will options activity have on ETH?
Let’s start off with David L. He wrote:
Hi, Ian and Amber, really liking the new approach that you are bringing to the former Bold Profits analysis. I am hearing that options activity on ETH is exploding in the weeks leading up to the merge. What impact will this have on ETH and other crypto?
Hi, David. Thanks for the great question!
Whenever there is an expected move that’s outside the normal range, you’ll see an increase in options activity. For instance, when a company like Amazon reports earnings, it will be surrounded by an increase in put and call buying as investors position themselves for a market-moving piece of news.
Crypto is no different. With the Merge, investors were trying to either hedge their risk or leverage up into a trade.
I don’t think increased volume activity gives us insight into the direction of the underlying asset, other than the market is likely to move in the direction away from the crowd.
Thus, if you see lots of put-buying activity, it could mean that market participants are braced for a sell-off, and a rally could appear on any positive news.
When should we buy more ETH?
Hello, Ian!! So glad you are the one whom we can trust next! It was a hard transition, but sincere honesty has shown through and won my heart and trust.
The “Crypto’s Breakthrough Moment Is NOW — With ETH 2.0” was a great article, but I have one question, please. I already have just a tiny [amount] invested in ETH. Are you suggesting we may want to purchase more NOW or WAIT until after next Thursday? Thank you so very much!
I would accumulate ETH on strong dips. Also, keep in mind this is an extremely volatile asset class, and position sizing is key to allow you to hold through the ups and downs.
Do we need to convert our ETH 1.0 into ETH 2.0?
You mention the transition from Ethereum to Ethereum 2.0. Does this mean my current investment into Ethereum 1.0 will be transferred into 2.0? Or would I have to buy into 2.0 aside from owning 1.0?
I am pretty green at totally understanding cryptos. Obviously, I would like to be into 2.0, but I don’t know if my current 1.0 becomes 2.0 after 9/15/22. Thanks for your help!
Yes! Depending on where you custody your ETH 1.0, the exchange will do the conversion for you. There’s nothing needed on your end, but I will keep my eye out for any wallets that aren’t doing the upgrade automatically.
What happens if you own ETH but it’s not staked?
I have a few questions — well, lots of questions. But I’ll only ask for clarity on a couple right now.
I bought some Ethereum and also other cryptos that are on Ethereum blockchain. I read you have to have 32 Ethereum to stake it. I don’t have anywhere close to that, so what happens when you own Ethereum and other crypto on that Blockchain before the 15th merge, but it’s not staked??
I’m having trouble transferring crypto from the Coinbase exchange and my Metamask wallet to my new Hard Wallet Ledger Nano S Plus. I still have a little on the exchange, some on Metamask and some on Nano S Plus. Does it matter where it sits?
Thanks for the great questions, Sherri.
There will be ways for you to stake ETH without owning 32 tokens.
When you transfer ETH to a hardware wallet, it’s considered “cold storage,” and there are limited ways for you to use it. Think of that wallet like a safe you buried in your backyard.
You will need to have it in Metamask or Coinbase to stake and earn network rewards.
Hope this helps!
Is ETH’s lack of a supply cap concerning?
And last but not least, Brian sent in a question on ETH’s supply cap.
Hi, Ian. I am a paid subscriber to your Strategic Fortunes.
I do see your points on ETH being the logical winner of the future cryptocurrency world.
However, you never talk about the fact that ETH has no cap on its max supply, whereas bitcoin (BTC) has a 21 million cap on its issuance.
Do you see this as a problem at all with ETH? One of the most attractive features of BTC is its limit on how many can be mined, similar to gold.
I see that the ETH supply automatically is proportional to how much demand there is for ETH, which is not same as the US dollar being printed at the whim of the Fed.
I would like to hear your take on this. Thank you.
Excellent question, Brian. Something not a lot of people are talking about is ETH’s deflationary aspect post-Merge.
Take a look:
Basically, after the Merge, there will be fewer ETH mined, dropping total issuance.
So pre-Merge, mining rewards were about 13,000 ETH per day.
Now that the Merge is complete, staking rewards will only be about 1,600 ETH per day. That will drop total new ETH issuance by about 90%.
And on top of that, there’s ETH’s “gas price” (the fee required to complete a transaction). At an average gas price of at least 16 gwei (the smallest denomination of ETH), at least 1,600 ETH are burned every day.
That effectively brings net ETH inflation to zero (or less!) post-Merge.
We Want to Know: What’s Your Favorite Format?
A huge RAD shout-out to David, Nancy, Daniel, Sherri and Brian for sending in those hard-hitting questions!
Your feedback and questions fuel Winning Investor Daily, so please, keep them coming.
And this week, we need your help more than ever!
We want to know: What’s your favorite format in Winning Investor Daily?
Ian and Amber’s Market Insights video?
Amber’s article and Mega Trend video?
Ian’s Tomorrow’s Biggest Tech Trends Today essay or his Friday video?
Let us know by writing to WinningInvestorDaily@BanyanHill.com.
And keep reading below for this week’s Winning ideas!
This Week’s Winning Ideas
Ethereum 2.0 Is Almost Here! — Ian King gives you an overview of what to expect about Ethereum’s massive merge to Ethereum 2.0!
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Stay Strong: Your Hard Work Today Will Pay — Higher-than-expected inflation numbers have turned the markets upside down. But don’t panic! Here’s what to expect going ahead.
Bill Gates Bet Big on This New Tech Trend — The world’s top tech minds are pouring money into this new tech trend. I believe it’s the key to unlocking a whole new generation of progress … and profits.
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Senior Managing Editor, Banyan Hill Publishing