Ethereum: record figures a few weeks before the Merge. Despite the scares brought to us by the crypto market, it is starting to stabilize slightly. According to some experts, the future looks bright and we could see a return of investors en masse. Ethereum seems to confirm this with rising futures volume.
The latter does not just increase, because it is actually a new all-time high for the cryptocurrency. This August 9, 2022, Mike McGlone expresses his position regarding Ethereum and Bitcoin. For him, futures contracts are a good way to measure the maturation process of these cryptos. In this article, we walk you through all the issues affecting Ethereum.
Futures trading, what is it?
For those whose term is still a little vague, trading futures is relatively easy to explain. It is also called a “futures contract” and its mission is to reduce the risks of price fluctuation for investors.
A future is defined as a contract being made between two parties, namely the buyer and the seller. The latter agree on a fixed price with a deadline fixed in advance. These contracts are said to be “standardized” and are traded on stock markets such as Ethereum for example.
How does it work with Ethereum?
For Ethereum, this means that both parties enter into agreements on the price of Ethereum when selling or acquiring the crypto. While futures contracts are common in other financial markets, they are unheard of for the Ethereum cryptocurrency.
Thus, when the futures contract expires, the currency is acquired regardless of the price fluctuations in the market. This method is very useful for speculating on the real value of the currency. It also gives a clear and concrete vision for the investor on what he will have to spend to acquire the currency.
For information, futures contracts were born in December 2017 with Bitcoin. For Ethereum, this transaction method is a bit newer. This allows Ether to be traded on the regulated CME market. The increase in Ethereum futures volume is a sign of good financial health for the cryptocurrency.
Mike McGlone, Bloomberg intelligence's senior commodities expert, says of Ethereum futures:
"If CME-listed futures are any guide, Bitcoin and Ethereum's maturation process is progressing well… 90-day Ether futures volume is at an all-time high and tilts on future forecasts of future revenue related to fusion."
Chart put forward by Mike McGlone to back up his point about Ethereum futures contacts
We then detect a bullish trend for Ethereum linked to the announcements concerning the merger. Futures contracts traded by the CME already factor in the crypto pie merger. This is a rather encouraging harbinger that demonstrates the recovery of players' confidence in cryptocurrency.
Ethereum numbers update
According to Skew Analytics, futures trading volume reached $28 billion as of August 8, 2022. Its interest rates set a new record between July and August. The largest recorded volume was $46 billion and was seen between July 18 and July 28.
These statistics are very encouraging in a context like this. Investors seem not to neglect the markets and are even very active there. A few months away from the release of “The Merge”, Ethereum looks set to regain value over the next few months.
The merger is scheduled for the end of this year and this is reflected in the enthusiasm surrounding Ethereum.
“The Merge” why did this merger change everything for Ethereum?
The Merge is on a mission to take Ether from the “Proof-of-Work” model to the “Proof-of-Stake” model. This mechanism is recognized as being faster and less demanding in energy. It will have the effect of greatly facilitating exchanges between buyers and sellers.
The old PoW system has flaws that are starting to show up in transaction fees. The merger is a necessary step to keep the crypto in the race against new and ever more successful competitors. With “The Merge”, Ethereum will be back in place with enhanced security and lower power consumption.
Investors are expecting a lot from this transition, which has already been delayed. The merger should be effective by the end of the year. If all goes well, Ethereum's rise should be steady for the next few years.
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