After the Merge, the negative spread between futures and spot prices has gone from $20 to almost $0.
The month-long oddity on the ether futures market, which was mostly caused by traders who wanted to make money from Ethereum’s technological change, the Merge, has gone away.
Ether futures are almost at the same price as the spot price of the cryptocurrency since Ethereum changed how transactions are verified.
According to data from Skew, the annualized rolling discount on one-month bitcoin futures listed on Deribit, the largest crypto options exchange in the world, went from 17.66% before the switch to 0.3% after the switch went live at 6:43 UTC. Futures listed on Kraken, OKEx, and the Chicago Mercantile Exchange all had their discounts shrink by a lot.
On major exchanges, like Binance, the three-month futures are traded at the same price as the spot price or with a small premium.
“The basis, which is the difference between the spot price and the futures price, was about $20 and was a good indicator of the potential value of ETHPOW,” Deribit’s Chief Commercial Officer Luuk Strijers said, referring to a possible token that would be created if the blockchain splits because of the change. “This negative basis (backwardation) has now gone down to about 30 cents.”
Strijers said that Deribit and other platforms took a snapshot of Ethereum at the time of the Merge in order to give ETH holders an equal amount of ETHPOW tokens, which is a possible Ethereum fork token. Most of the time, snapshots or records of the blockchain’s content are used to figure out who will get the planned airdrop, which is the free distribution of forked tokens.
So, people on the market no longer have to hold ETH or do the so-called “market-neutral trade” of buying ether and selling short-term futures in order to get ETHPOW tokens and avoid the risks of the ETH price fluctuating.
So, the record discount, which was mostly caused by the market-neutral trade, has pretty much gone away.
Early last month, traders started selling futures on ETH holdings after some miners argued against the Merge and suggested splitting the Ethereum chain into a proof-of-work (PoW) chain and a proof-of-stake (PoS) chain. If Ethereum were to split, people who owned ETH would get ETHPOW, the native token of a new PoW chain, for free.
This made futures trade at a lower price than the spot market. This is called “backwardation,” and it happens when futures trade at a discount. Futures usually trade for more than spot, which shows the value of money over time.
Monday, @EthereumPoW posted on Twitter that the PoW fork would happen 24 hours after the Merge. This means that the forked chain will probably go live on Friday.
