Ether (ETH) dropped 7% and the ETH futures market became more sensitive to staking yields post-Merge. LedesmaLyllah and Godbole17 report in First Mover by CoinDesk Markets
is a broad-based index designed to measure the market capitalization weighted performance of the digital asset market subject to minimum trading and exchange eligibility requirements.By Omkar Godbole, which happened on Thursday, has introduced several structural changes to the blockchain, promising to make it more environmentally friendly and reduce the supply of its native token ether .
According to traders, one consequence of the upgrade is that the activity in the futures market will now be closely tied to staking yields – rewards earned by locking ETH in the network in return for a chance to verify transactions under theThe bigger the reward for staking, the greater the number of stakers and the stronger the demand for shorting or selling futures.
, due in mid-2023, and will earn rewards in ETH, which makes stakers vulnerable to potential ether price slides. Therefore, they will likely hedge their ETH exposure by selling futures contracts tied to ether.futures. That's why open interest [number of open positions] is so high, and it will only grow if staking yields go higher," Zaheer Ebtikar, portfolio manager at crypto hedge fund LedgerPrime, told CoinDesk.
Ethereum's network switched to the PoS system on Thursday after the PoS Beacon Chain launched in December 2020 merged with the Ethereum mainnet that used a mechanism whereby miners solved algorithmic problems to validate transactions in return for rewards. In other words, stakers are new validators.substantial miner selling from the spot market, it could bring more sellers to the futures market and cap the basis or the difference between prices in futures and spot markets or perhaps push futures into backwardation.
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