Ethereum all-time high: why this is just the beginning
Ethereum (ETH) has reached a new all-time high, breaking through the US$1,500 mark for the first time. But that seems to have been just the beginning. Some indicators suggest that there is still significant room to move up. The market update.
On 8 February the time has come and the world’s largest futures exchange, the Chicago Mercantile Exchange (CME), introduces Ethereum futures. The contracts bring back memories of 2017, when the launch of bitcoin futures coincided with a peak in the leading Bitcoin Pro digital asset and the price subsequently crashed. Many blamed the CME for Bitcoin’s (BTC) spectacular price crash then, and some wonder if the same could happen now with Ether.
Nikolaos Panigirtzoglou, an investment strategist at JPMorgan Chase & Co. thinks it’s possible that ether futures could cause negative price momentum. This would be because large investors could bet on falling prices of ETH through the introduction of ether futures on a large scale. Nevertheless, Ether is currently unimpressed. The smart contract platform climbed to an all-time high of 1,565 US dollars at the time of going to press and rose by 11.15 per cent within the last 24 hours.
This means the Ethereum price has now outperformed Bitcoin (BTC) in both 2020 and 2021.
Furthermore, there is currently much to suggest that Ethereum will not suffer the same fate as Bitcoin in 2017 on 8 February.
Ethereum futures premium is bullish
The Futures Premium measures how expensive longer-term futures contracts are compared to the Ether price on traditional spot markets. Therefore, the indicator can be seen as a reflection of investor optimism, among other things. Currently, futures contracts are slightly above spot market prices, suggesting that investors are extremely optimistic about further price gains in ETH.
An annualised premium of 10 to 20 per cent is healthy for the markets and any figure above this range indicates great optimism. Conversely, the absence of such a premium is a sign that investors may be bearish.
The chart above shows that the premium was drastically reduced on 21 January. This is related to the 20 per cent plunge in the ETH price at the time. In contrast, only recently, on 27 January, the premium reached an annualised rate of 8.7 per cent.
This data suggests that the futures markets are still bullish. Despite the sometimes drastic sell-offs in recent weeks, investors in the futures markets continue to take a positive stance. Moreover, the current value of 2.9 per cent corresponds to a healthy annualised premium of 20 per cent. This indicates that the bulls do not expect too much of a price setback in ETH in the near future and that there is still a lot of room to move upwards.