Ethereum jumped 5% as derivatives data revealed a price decline.

During the course of the last day and a half, the price of Ethereum has reached new heights, surpassing $2,000 for the first time since May. The price of the second-largest cryptocurrency is up 5% after a string of gains.

The cost of Ether has been on an upward trend since the beginning of July for a considerable amount of time. As a direct consequence of this, the value of Ether has increased by almost one hundred percent over the course of the last forty days.

In September, the much-anticipated Merge Upgrade will finally be released, and Ethereum developers are getting ready for it. During the Upgrade, the network will change from using the Proof-of-Work (PoW) protocol to instead using the Proof-of-Stake (PoS) protocol.

The Merge-Inspired Price Rally of Ethereum

The recent price increase was precipitated by the upcoming Merge Upgrade, which will launch next month. It is anticipated that this optimistic outlook will persist until the Ethereum development team announces the Merge.

According to Glassnode, for the first time in the network’s history, ETH options have surpassed BTCs in terms of interest. Ethereum’s Open Interest is $6.6 billion, while Bitcoin’s is $4.8 billion. However, this is the result of traders who bet heavily on call options following the Merge launch announcement.

Following the conclusion of the Goerli testnet, the network experienced a period of rapid expansion as investors became increasingly optimistic regarding its prospects. The Enhancement will reduce the frequently criticized high gas fees and other platform scaling.

Moreover, the king of altcoins is gaining popularity as investors anticipate a price increase. As the Merge event draws closer, there is a decreasing amount of money leaving the exchange, while at the same time there is an increasing demand for the token.

Investors are increasingly attracted to trading asset derivatives over Bitcoin. All indications point to the open interest in Ethereum surpassing its November 2017 all-time high.

The majority of investors have high expectations for values up to $2,500, which is why the Merge has been the primary factor in determining how well the tokens have performed.

Should Investors Be Wary of the Upcoming Turn?

According to the data gathered from the derivatives market, traders of Ethereum were getting ready for the possibility of a price decrease after the Merge. After what seems to be a flawless beginning, Glassnode experts believe this post-event will make headlines.

According to the data, the September Merge fever ended up taking precedence over the Option Interest as the price reached $2,200. It is important to note that the demand for options drops dramatically one month after the Merge schedule is announced.

Additionally, this hints at the fact that traders are willing to trade the potential for losses in exchange for better protection for their positions. The sharp uptick in momentum came out of nowhere, even though it was only temporary. The “sell-the-news” strategy is being relied upon as a hedge against losses after Merge, say market experts.

Vitalik Buterin, one of Ethereum’s co-founders, mentioned that the value of the Upgrade has not been determined by the team as of yet. The focus has now shifted to how the network handles the situation post-Merge.

The transition to PoS will result in the unemployment of miners, leading to their discontent. For their part, the miners are attempting to continue mining by creating a copy of the proof-of-work protocol for Ethereum (ETH PoW). Due to the fact that public support is essential to Ethereum’s success, the newly proposed fork will have a negative impact on the network.

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