In her recent tweet, Arthur Hayes, the Co-founder of 100x, mentioned the current Ethereum futures term structure. 

As per the image shared by her of the futures term structure, the curve is in backwardation, that is, futures<spot, out until January 23. As per her views, it is because traders are hedging out Ethererum exposure pre-merge. 

1/ An interesting observation about the current $ ETH futures term structure.

- Arthur Hayes (@CryptoHayes) Αύγουστος 11, 2022

This has come amid the discussion going on related to the transition of Ethereum from the Proof of Work (PoW) consensus mechanism to the Proof of Stake (PoS) consensus mechanism. 

If the marginal pressure is on the sell side, then the market makers must short the sell spots in order to protect themselves. Naturally, this increases the cash or spot market’s downward price pressure.

She questioned about the fact what happens if the merge is successful and hedgers cover their shorts, so they are net long Ethereum again. Also, what if speculators who think the Yolo would “triple-halve” enter leveraged long positions?

Now it is seen the pressure is on the purchase side, as the market makers are short futures and must go long spot. A change in their positioning pre-merge.

In a positive assumption loop that leads to higher spot prices, should the merge go smoothly on September 15? 

Lastly, as per her, if you think the merger will be successful, then this is yet another positive structural reason why $ETH might open the gap up higher into the end of the year.