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Ethereum’s Futures Premium Hit 7-Month Low: Price Analysis

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Ethereum’s futures premium hits a 7-month low as the price reaches $2800 today according to the charts that we have in our latest Ethereum price news.

ETH price dropped 30% in two weeks and the derivatives data shows traders are getting bearish even with the rally leading it back to $2800. ETH reached a local high on February 10 of $3280 and marked a 51.5% recovery from the $2160 cycle low which was the price point lowest recorded in six months and explains why derivatives traders’ mains sentiment gauge dropped to bearish levels.

Ether’s futures contract annualized premium reached 2.5% on February 25 and reflected on the bearishness despite the 11% towards $2700. The worsening conditions only show the investors’ doubts regarding the ETH network’s shift to the proof of stake mechanism. The much-anticipated sharding upgrade will boost the processing capacity and could come into effect in late 2022. analyzing Ether’s performance from the long-term perspective it will prove a more appealing sentiment as the coin is now sitting 45% below the $4870 all-time high.

Ether futures 3-month annualized premium. Source Laevitas

The ETH network adjusted total value locked held a reasonable 42.8 million in ETH despite the recent price correction and as the charts show, the network’s TVL increased by 16.5% in three months which reflects the growth from theft and DEFI marketplaces. Due to the network upgrade, the days are getting worse along with the macro conditions and professional traders are becoming much more frustrated, a sentiment that is depicted in multiple derivative metrics.

Ethereum’s futures premium hit a 7-month low and the retail traders avoid quarterly futures due to the fixed settlement date and the price difference from the spot markets. The contracts’ biggest advantage is the lack of fluctuating funding rate which is why we have a prevalence of arbitrage desks and professional traders. The fixed-month contracts trade at a slight premium to spot markets because the sellers are requesting much more money to withhold the settlement longer and the situation is known as a “contango” and not exclusive to crypto markets.

eth network
Ethereum network total value locked, in ETH. Source DefiLlama

The futures trade at 5% and 15% annualized premium in the healthy markets so ETH’s annualized premium decreased from 20% to a stagnant 2.5%. The basis indicator remains positive and it reached the lowest level in seven months but the crash to $2400 only caused the bearish sentiment to prevail and not even the recent recovery of 10% was enough to flip sides. The data shows a few signs that the bulls are ready to regain control and if that were the case, the ETH futures premium will have turned positive after a rally.

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