Multiple Factors Behind Ethereum (ETH) Dumping Prior to Merge

• Whales are unloading their ETH reserves because of the anticipated deflationary trend.
• The expiration of $2 billion in options on September 30 is also a big concern.

The EIP-1559 burning mechanism will cause a deflationary trend in the price of Ethereum (ETH) following the Merge. However, ETH continues to fall below $1500 even before the Merge. The pressure is coming from the expiration of about $2 billion in options on September 30 as well as from the selling of ETH by “whales,” or large investors, Feds aggressive approach.

After the Merge, Ethereum is expected to become a deflationary cryptocurrency since the supply of ETH would be cut by 90%. OKLink, an on-chain platform, reports that since the EIP-1559 went live in August 2021, more than 2.6 million ETH had been burnt. There has been about $8.5 billion worth of ETH burned thus far. With EIP-1559 in place, Ethereum’s yearly inflation rate has dropped by 50.77 percent.

Investors Forced to Liquidate

As a result of the anticipated deflationary trend in Ethereum post-Merge, whales are unloading their ETH reserves. Ethereum (ETH) supply owned by exchanges has surged in August, while non-exchange whales seem to be dumping their holdings. What this suggests is that whales are bearish on the price of Ethereum (ETH) after the Merge.

In reality, whales and traders are being pushed to liquidate their ETH holdings due to the deflationary Ethereum price post-Merge and the expiration of $2 billion in options on September 30.

On August 26th, Ethereum saw $1.27 billion in options expire. When the price dropped below $1600, many investors cashed out. With $2 billion of ETH options scheduled to expire in the wake of the Merge, the next expiration is expected to see a flurry of trading activity. The price is also lower than the maximum pain threshold of $1600.

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