A long-awaited Ethereum software upgrade known as “The Merge” has finally happened with promises that it will reduce energy consumption by 99.95 percent for transactions of the world’s second-largest cryptocurrency.

Many are calling the Merge the most important moment in crypto history. It is expected to set the stage for more technical upgrades that will help increase network capacity and lower transaction fees — two of the top criticisms of Ethereum and the reason alternatives like Solana and Cardano rose in popularity.

However, some crypto observers and stakeholders question whether or not the merge is a sell-the-news event, with a huge price increase leading up to it, followed by a huge drop coming in the days after the Sept. 15, 2022 merge.

“The Merge refers to the original Ethereum Mainnet merging with a separate … blockchain called the Beacon Chain,” according to the Ethereum Foundation, a nonprofit dedicated to supporting the crypto and its related technologies.

Prior to the merge, transactions were approved on the Ethereum blockchain by solving complex puzzles using an energy-intensive mechanism called proof-of-work. Following the merge, Ethereum is switching to a consensus method called proof-of-stake, with users depositing their ether to participate in the race for more currency. Node operators stake their cryptocurrencies for the chance to validate transactions instead of competing with miners and powerful computers.

Vitalik Buterin, the Russian-Canadian programmer who co-founded Ethereum, tweeted that the upgrade will “reduce worldwide electricity consumption by 0.2%.”

"The merge will reduce worldwide electricity consumption by 0.2%" – @drakefjustin

— vitalik.eth (@VitalikButerin) September 15, 2022

Five days before the merge, Ether, the native token of Ethereum, was up almost 66 percent from June 30, after risk assets fell to 2022 lows. Ether has outperformed Bitcoin by about 63 percent at its peak, according to Glassnode.

Two days before the merge, Ethereum was down 8.7 percent ahead of its biggest upgrade as the Department of Labor numbers for August showed that inflation, at 8.3 percent, was still running hotter than analysts had expected.

“Traders are dumping ETH on the news of high inflation in the U.S.,” CryptoBriefing reported Tuesday.

This prompted some observers to ask if the merge was about to become a sell-the-news event with the potential for increased ETH selling, even if the merge is successful.

“Buy the rumor, sell the news” is a popular expression among traders, according to CryptoBriefing. In this scenario, asset prices rise in anticipation of a big event, then plummet once the event happens. Sell-the- news events are common in crypto, where assets can move up or down “violently” based on big developments and market sentiment. 

Hours after the merge, the price of ETH decreased 6.5 percent in a little more than an hour from $1,588 at 10:09 a.m. EDT to $1,484 at 11:15 a.m. EDT.

Arthur Hayes, the co-founder of BitMEX, suggested that he thought the Merge could be a sell-the-news event with the possibility of a 20 percent price drop in the days following it, according to an interview on cyrpto guide on Bankless. However, Hayes said he was long on ETH longer-term, describing the Merge trade as “a no-brainer” because of ongoing demand for Ethereum DeFi and the planned reduction in ETH issuance.

Leigh Drogen, chief investment officer of Starkiller Capital, warned of a potential “sell the news” scenario following the 8.3 percent consumer price index report. The Merge has two catalysts, he told Crypto Briefing — the plans for a proof-of-work Ethereum fork and potential news coverage of the event leading to increased retail interest.