Prediction: Ethereum at $2,300
The Ethereum Merge should happen approximately one month from now. It sits at $1,891 as I write this.
I’m going to go out on a limb and predict that $ETH.X threads the macro environment needle and sees a meaningful run-up leading up to the merge.
This could go sideways if:
  • The market begins to believe that the Fed will raise interest rates faster than expected later in the year.
  • If technical trouble arises
But this could go great if:
  • The removal of structural sell pressure surprises short term traders and they realize all the lines in their charts need to be re-drawn because of new flow dynamics.
  • Institutions realize that there is a 5.2% real yield (not nominal) to be had by staking $ETH.X . The highest real yield in crypto.
What am I missing?
Fill in the blank:
Nathan’s prediction will be wrong if ___
Prediction:
Validated to: No
$$ETH.X$$ will be over$ $2,300.00$/share on 9/16/2022$
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62 Votes
Jensen Butler's avatar
You got my vote. In part, but not exclusively, to the subtle dig to the line drawers 😄
Nathan Worden's avatar
@jensen always fun to think about who else is trading in the market and what may surprise them. In the case of Ethereum, you have to be honest and say one of the main use cases as of now is speculation. I think the Merge is a fundamental event that while speculators are certainly aware of it) they don’t have a lot of experience predicting what this move might look like.
Nathan Worden's avatar
One thing that is nice about Commonstock is that you can verifiably see how much of my portfolio is riding on this prediction: ~3%.

So not Yolo’ing but also not insignificant.
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Dissecting the Markets's avatar
I hope that my $ETH.X can be unlocked when the merge happens
Nathan Worden's avatar
@dissectmarkets That'd be nice but it's looking like it will be at least 6 months to a year after the merge for staked ETH to be unlocked.
Preston | Investor Insight's avatar
Will most likely turn into a buy the rumor, sell the news type of event.
Nathan Worden's avatar
@investorinsight It definitely could be— probably the safer bet tbh.
Preston | Investor Insight's avatar
@nathanworden $BTC is breaking down out of a rising wedge as well. This could drag the whole crypto market down including $ETH.
Nathan Worden's avatar
@investorinsight Definitely— although I think post-merge the best trade would be to short Bitcoin and long ETH. ETH's security efficiency will improve drastically compared to Bitcoin. ETH will become a structural demand asset with a real (not nominal) yield.

I think you will see a lot of flow out of Bitcoin and into ETH.

Shorting bitcoin would help hedge against macro risk while going long Ethereum collects the merge trade.

Here is the ETH / BTC ratio over the last month. ETH has been rising steadily. I'm betting this continues into and post merge.

But of course, I could always be wrong! Happens all the time :)

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Preston | Investor Insight's avatar
@nathanworden Great analysis and very possible - to me, it all depends on the Fed. If Fed is in a QE cycle, alt coins and $ETH will outperform. If they are in a tightening cycle, $BTC will outperform.

In stock world, I think of $BTC as a large cap and $ETH as a mid cap.
Nathan Worden's avatar
@investorinsight Very fair, and that is one of my biggest known risks factors with this trade... I'm being pretty arrogant by thinking I can fight the Fed. We're definitely still in a quantitative tightening cycle.
Conor's avatar
I thought if you stake you aren't able to sell? What would happen if the price went up leading up to the merge then tanked after? Wouldn't you be bag holding?
Nathan Worden's avatar
@conorvalue Correct, if you are staking you aren't able to sell. But I am currently using Stakewise instead of staking directly on Ethereum. Stakewise issues a Stakewise token that you can sell and get your money back, whereas Ethereum you are locked up. I'm taking on risk (trusting the Stakewise protocol) in exchange for having the ability to sell.
Conor's avatar
@nathanworden sounds like that has zero risk...LOL
Nathan Worden's avatar
@conorvalue haha exactly, definitely another layer of risk added on there 🙃
Preston | Investor Insight's avatar
image100%. I’m keeping a close eye on the seasonality right now as we are on the red line and it has resulted in new lows in history. As we know, past performance does not indicate future, but I’m been slowly adding to my short positions on this move up preparing for this slide. This rally has had some serious legs though.

Nathan Worden's avatar
@investorinsight wow yeah looks like the general pattern has held for 2022
Rihard Jarc's avatar
__ = you look at the long term ;)
Nathan Worden's avatar
Off to a bad start!
Down 12% today to $1,614 🫠

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Nathan Worden's avatar
Welp, we are two days out from the end of this prediction, and ETH is at $1,602 instead of $2,300.

ETH would have to go up 43% in two days for this to come true.

So what ended up happening?

Inflation came in today a bit higher than expected. A 75 bps hike is now assumed by the market, and a potential additional 75 bps hike is now on the table later in the year.

In short, the macro environment has stayed hostile to growth. Usage of Ethereum is low enough that gas fees aren't high enough for 'the burn' to turn Ethereum deflationary.

Lesson learned: Respect macro. Not that it's possible for me personally to predict macro, but that its a good reason to be more humble when making predictions.
Josh Rozin's avatar
😭 damn i was right but I wish I was wrong
Nathan Worden's avatar
@josh I was wrong but wish I was right! Let's trade places 😄
Nathan Worden's avatar
Final outcome: Ethereum is at $1,360

My prediction was that ETH would go up $500... instead it went down $500 🙃

Takeaway: Persistent inflation and the Fed raising rates has made investors wary of risk assets. Macro beat out 'The Merge' which gave $ETH a bit of a tailwind from ~ July 11th until September 10th, but then turned into a 'sell the news' event.

The structural tightening of Ethereum's supply still occurred, but for it to have an impact on price, we're probably going to have to wait until better macro conditions.

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