CNBC Analyst Brian Kelly Warns Upcoming Ethereum Merge Is More Risky Than Traders Realize – Here’s Why

The CEO of digital currency investment firm BKCM is weighing the prospects for Ethereum (ETH) just weeks before the project kicks off major network upgrades.

In a new episode of Fast Money, CNBC contributor Brian Kelly said that Ethereum investors may not earn as much as expected on profitable trades due to Ethereum’s inflationary mechanism. I mentioned one thing first.

“I think it’s probably ‘selling the news,’ but in cryptocurrency you generally want to buy news, so that might not be intuitive. But everyone is buying Ethereum. Because they embarked on this merger and now they’re trying to get what they call a yield.

As you know, it’s not really yield. It’s kind of like offsetting currency inflation because it’s just the inflation rewards coming back. “

Kelly expects investor excitement before ETH will switch from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) consensus mechanism in mid-September will inevitably lead to selling. warns that it is possible. There is the possibility of disruption or complete failure that could adversely affect not only the project itself, but also the price of Ethereum.

“Events that sell news will likely go into mergers.

Also, technical glitches may occur.but also [that]but there are many questions about what will happen to the app if Ethereum splits again.

Instead of one chain fork, you can have two or three different Ethereums. So what does your DApp (Decentralized Application) do and play?

I think the Ethereum merger carries more risks than people give credit for. “

Looking more broadly at the economy, analysts discuss correlations between cryptocurrencies and the tech stock sector, highlighting fundamental differences between Bitcoin (BTC) and Ethereum.

Bitcoin’s correlation with the Nasdaq is around 60%. Ethereum’s correlation with the Nasdaq is around 70%, rolling over the last 30 days. It works like a Q ETF. [exchange traded fund].

I think there is a nuance here in that Bitcoin itself is not a technology stock. It is definitely an alternative currency. It’s digital gold. You need it when your country destroys its currency, as many governments do today.

Ethereum, on the other hand, can be considered a tech stock because it disrupts much of what technology stocks do today.

As long as daily active users stay away from places like Twitter, Facebook and Google, I think Ethereum being a tech stock has something to say. “

At the time of writing, ETH is trading at $1,578 and BTC at $19,983.


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