Ethereum futures indicate 30% 'airdrop rally' ahead of backwardation merge
Ethereum Future
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Ethereum futures indicate 30% 'airdrop rally' ahead of backwardation merge
Ether (ETH) bulls like a positive spread between their spot and ETH futures prices as the so-called contango shows optimism about higher rates in the future. But by August 1, the Ethereum futures curve had slid in the opposite direction. On the daily chart, the Ethereum futures quarterly contract, which is due to expire in December 2022, has slipped backward, a bet in contrast to Contango, in which the futures price moves lower than the spot price.
On the one hand, with the current ETH spot price exceeding its year-end outlook, it looks like a bearish signal. However, the conditions surrounding the current downside spread between the Ether spot and futures prices suggest that traders may indeed be bullish on ETH. Moreover, according to some analysts, the potential for a merge in September is likely to accelerate the chain split.
Roshun Patel, former VP of Institutional Lending at Genesis Trading, said that Ethereum has turned to a December Ether futures backwards due to “fork odds” that could prompt traders to buy spot ETH before the merger. Meanwhile, Patel indicated that traders may offset their upside spot risks by taking bearish positions on the December futures contracts. The statement comes after Galois Capital conducted a survey on the merger.
In a July 28 Twitter survey, the crypto mutual funds found out if the consolidation would part the Ethereum chain into evidence of-work (PoW) ETH1 and verification of-stake (PoS) ETH2. Of the respondents, 33.1% said that the update would prompt a hard fork, while 53.7% expected a smooth organization progress. Ether is currently merging inside a key $1,650-$1,750 opposition bar that goes about as help during the May-June 2022 meeting.
Meanwhile, the 20-day (green) and 50-day (red) exponential moving averages (EMAs) of the coin have also formed a “golden cross”, suggesting an interim bullish outlook. A breakout above the $1,650-$1,750 resistance area could see ETH as the next target of $2,150. This level was important as resistance in May and June and as support in January. It is now near $2,180 with a 200-days EMA (blue wave), which is almost 30% higher than the August 1 price.
Ethereum bears like a contrarian spread between their spot and Ethereum futures prices. The two prices have tracked each other over the past month, with Ether futures rising higher than the actual currency in its recent streaks. Yet on August 1, the curve moved in reverse, suggesting contango has eroded since then.