CNBC analyst Brian Kelly warned investors of the potential risks of an upcoming merge upgrade.
Kelly, who is also the CEO of digital currency investment firm BKCM, discussed the expectations before the Ethereum merge.
CNBC Analyst Warns
Speaking in a new episode of Fast Money, Kelly warned that Ethereum investors may not be able to make huge profits as they expected due to the asset’s inflation mechanism.
“I think it’s probably a sell the news. Because you usually want to do that in crypto. Everyone is buying ETH for this merge and they think they can get a return.
Just so you know, this is not a real payoff. You get the inflation rewards back. This is not a real return”
The term “sell the news” means taking advantage of market movements by opening a position on a rumor in anticipation of an announcement that may cause a shift in the markets. Traders close their positions with a significant profit with the news.
Kelly, along with Merge, warned that big sell-offs could also occur as an inevitability of investor excitement.
“There is probably higher potential for ‘sell the news’ with the merge.
A technical malfunction may also occur. There are also questions about what the applications will be if Ethereum splits again.
You can have a chain fork, not one, but two or three different Ethereums. What about the state of the DApp when this happens.
I think there is more risk involved in Ethereum Merge than people expect.”
Ethereum is trading at $1,551 at the time of writing, according to CoinMarketCap data.
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