Brian Kelly Warns That The Merge Has Potential Risks For Traders

Brian Kelly, CEO of digital currency investment firm BKCM, weighs in on the possibilities for Ethereum (ETH) just weeks before the project launches a significant network upgrade.

In a new episode of Fast Money, CNBC contributor Brian Kelly discusses how Ethereum investors may not be gaining as much as they should for winning trades due to ETH’s inflation mechanism.

“I think it’s probably more ‘sell the news,’ which is maybe not that intuitive because in crypto you generally want to buy the news. But everybody has been buying Ethereum because they’re going into this merge and now you’re going to get a so-called yield.

Just so you know, it’s not really a yield. You’re just getting your inflation rewards back, so it’s kind of offsetting the inflation in the currency. It’s not really a yield.”

Kelly anticipates that investor excitement in the run-up to ETH’s mid-September switch from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism will inevitably lead to a sell-off, but warns that there is also the risk of confusion or outright failure, which could harm both the price of Ethereum and the project itself.

“There’s probably a higher potential for a sell-the-news event going into the merge. You could also have a technical glitch. Not only [that], but there are a lot of questions about what the apps are going to do if Ethereum splits again.

You could have a chain fork and now not one, but two or three different Ethereums. Then what does your dApp (decentralized application) go on and play on? I think that there’s more risk to the Ethereum merge than people are giving credit for.”

Looking at the economy as a whole, the expert addresses the association of cryptocurrencies to the tech stock sector while emphasizing the underlying distinctions between Bitcoin (BTC) and Ether.

“I think there’s some nuance here, in that Bitcoin itself is not a tech stock. It is definitively an alternative currency. It is digital gold. You need it when your country destroys its currency, like a lot of governments are doing today.

Ethereum, on the other hand, can be somewhat thought of as a tech stock because it is going to disrupt a lot of what tech stocks are doing today.”

At time of writing, ETH is trading at $1,549.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page

Harold

CoinCu News