BitMEX co-founder Arthur Hayes: Reasons for ETH spot price higher than futures, successful merger will push prices higher by the end of the year

BitMEX founder Arthur Hayes commented on the current Ethereum futures structure. Link to tweet.

He stated that the current curve shows "backwardation," where spot prices are higher than futures prices, until January 2023. His speculation is that traders are hedging their positions ahead of the merger.

He mentioned that if the margin pressure is on the sell side, market makers will go long on futures and must sell spot to hedge. This also exacerbates downward pressure on cash or spot prices.

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Arthur Hayes speculated that if the merger is successful, hedgers will short cover, after which they will only go long on ETH. Moreover, what will happen if speculators who believe in the "triple halving" enter leveraged long positions?

"Currently, buyers have no pressure, and market makers shorting futures must also be bullish on spot. Their positions are reversing before the merger." He stated that if the 9/15 merger goes smoothly, it will be a positive feedback loop leading spot prices higher. If you believe the merger will succeed, this is a structural reason to explain why ETH will push higher towards the end of the year.

Arthur Hayes previously said he bought a $3,000 December 2022 options contract

In his latest article "Max Bidding," Arthur Hayes detailed his maximum bid, setting up four ETH/USD price predictions and expected values based on whether the "Ethereum merger" and "Federal Reserve's pivot to inflation policy" will happen, with a deadline set for March 31, 2023. He also shared his basic assumptions and predictions.

He believed that the expected value for March 31, 2023, should be $2,815, so he should buy a bullish call option with a strike price of $2,800, purchasing the right to buy 1 ETH at a premium of 0.14 ETH, with a Delta of 0.37 and an implied volatility of 98.3%. However, wanting to take on more risk in light of the merger and potential upside while paying less time value, he bought a December 2022 options contract with a strike price of $3,000.

Potential Issue: PoW ETH Speculator Trends?

While Arthur Hayes remains optimistic, a report on "Ethereum Fork Chain Summary | Possible Chaos and Potential Arbitrage Strategies after Hard Fork" suggests that speculators of PoW ETH fork coins cannot be ruled out. If there are delays in the merger or an unsuccessful fork, there may be selling pressure.