Ethereum price futures slip into backwardation, BTC in contango: Kraken

Ethereum price continued its strong downward trend against the US dollar and Bitcoin as its linear weekly futures moved into backwardation.

Ethereum (ETH) crashed to 0.023 against Bitcoin (BTC), its lowest level since May 2020 and 74% below its highest level during the pandemic.

Similarly, the coin dropped to a low of $1,770, its lowest point since October 2023, and 57% from its highest level in December of last year.

The ongoing Ethereum price crash is attributed to several factors like the ongoing ETF outflows, increased competition from layer-1 and layer-2 networks, and the fact that it is no longer the most profitable players in the crypto industry.

Analysts at Kraken have also identified another reason by looking at the futures market. In a note to crypto.news, Alexia Theodorou, the head of derivatives, said in a statement to crypto.news that ETH weekly linear futures had entered backwardation for the first time since August last year. Bitcoin futures, on the other hand, have remained in contango in this period. The statement said:

“Ether’s linear weekly futures have entered backwardation for the first time since last August, reflecting growing bearish sentiment in the market and following a sharp 20% decline in the ETH price. Bitcoin’s futures remain in contango, suggesting relative strength in BTC amid broader market uncertainty.”

Linear weekly futures are those contracts that settle weekly and pay out in a straightforward way based on prices. By moving into backwardation, it means that the futures price has become lower than the spot price, which is a sign that the market expects the price to drop further.

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On the other hand, contango is the opposite of backwardation and is a situation where futures prices are higher than the current levels. It is a sign that the market anticipates the relative strength of Bitcoin in the future.

Ethereum vs Bitcoin price analysis

ETH price chart | Source: crypto.news

The weekly chart shows that the ETH/BTC price has been in a freefall in the past few years. It remains below all moving averages, a sign that bears are in control. It is now approaching the key support at $0.02350, the lowest swing on December 20.

The Average Directional Index, a popular indicator that measures a trend’s strength, has moved to 38. A move above 25 is a sign that the trend is strengthening.

The Relative Strength Index and the Stochastic Oscillator have moved to the oversold level. Therefore, the token will likely continue falling as sellers target the next point at $0.0173, the lowest swing in December 2019.

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