Ethereum’s EIP-1559 upgrade is imminent, but derivatives indicators show that traders are not bullish

巴比特

特邀专栏作者

2021-07-02 11:57 (UTC+8)

This article is about 1035 words, reading the full article takes about 2 minutes

Last week, Ethereum fund outflows hit a record high of $50 million, according to data from CoinShares.

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Last week, Ethereum fund outflows hit a record high of $50 million, according to data from CoinShares.

Derivatives data shows that traders are not as strongly optimistic about Ethereum compared to Bitcoin. While altcoins have gained nearly 200% in the first half of 2021 compared to Bitcoin's 22% gain, traders appear to be more vulnerable to Ethereum's recent underperformance.

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Price of Ethereum (orange) vs. Bitcoin (blue) Source: TradingView

It is worth noting that in June, Ethereum’s performance in June was 16% worse than that of Bitcoin.

It is reported that the London hard fork is scheduled to be held in July, and its core proposal is called EIP-1559, which will limit the Gas fee of Ethereum. Therefore, when the network migrates away from proof-of-work (PoW), price action may be related to dissatisfied miners.

Because of this, ethereum investors have reason to be concerned, as uncertainties abound.

They believe that perhaps miners supporting competing smart contract chains or other unexpected events could further negatively affect the price of ethereum.

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1 Ethereum December futures premium shows weakness

In a healthy market, quarterly futures should trade at a higher price than regular spot trades. In addition to the exchange risk, the seller "locks in" funds by deferring settlement. A premium of 4% to 8% in the December contract should more than compensate for these effects.

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OKEx BTC (blue) vs ETH (orange) December futures contango Source: TradingView

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2 Another drop will do more damage to altcoins

Another argument that could negatively impact the Ethereum premium is the impact of a possible 30% negative performance in Bitcoin. Filbfilb, an independent market analyst and co-founder of the Decentrader trading suite, said a 30 percent plunge in bitcoin could trigger altcoins to drop twice.

Clem Chambers, CEO of financial analysis site ADVFN, also predicted another possible drop that would repeat the crypto winter period of late 2018. Chambers claims that Bitcoin may capitulate and fall back to $20,000.

While overall market sentiment is neutral to bearish, it seems prudent to predict a tougher scenario for Ethereum, including the uncertainty surrounding the transition to proof-of-stake (POS).

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