The Ethereum futures premium recently breached a 1-year high. Cointelegraph investigates the factors behind the metric and their ramification on ETH price.
ETH rallied alongside Bitcoin as new spot ETF news emerged, and the altcoin could benefit from the failure of its layer-1 competitors.) price has declined by 14.7% since its peak at $2,120 on April 16, 2023. However, two derivatives metrics indicate that investors have not felt this bullish in over a year. This discrepancy warrants an investigation into whether the recent optimism is a broader response to Bitcoin in the United States.
The Ether futures premium, which measures the difference between two-month contracts and the spot price, has reached its highest level in over a year. In a healthy market, the annualized premium, or basis rate, should typically fall within the range of 5% to 10%.Such data is indicative of the growing demand for leveraged ETH long positions, as the futures contract premium surged from 1% on Oct. 23 to 7.4% on Oct. 30, surpassing the neutral-to-bullish threshold of 5%.
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