Ethereum shillers call for $5K ETH, and this time derivatives data is backing them up

November 1, 2021 Coin Telegraph

Ethereum shillers call for K ETH, and this time derivatives data is backing them up

basis

Ether bulls have been calling for $5,000 ETH for years, and now derivatives data suggests that the price is finally realistic.

Ether (ETH) pundits have been shouting that the $5,000 price is 'programmed,' since 2018 and some go even further by calling for $20,000 over the long-term.

$5000 $ETH.

It is programmed.
— Koroush AK (@KoroushAK) October 29, 2021

A portion of these bullish calls are based on ETH 2.0 staking and the reduced inflation resulting from EIP-1559.

At this time in 2017, $BTC was around $2k

Just 7 months later it was almost $20k

What do you think happens when the world wakes up to the APR and deflationary aspect of $ETH that is coming in less than 2 months?

$20,000 is programmed IMO

This should be your largest position
— Don't Follow Shardi B If You Hate Money $ (@ShardiB2) May 16, 2021

The $20,000 estimate is equivalent to a $2.36 trillion market capitalization, and even if it is feasible, it still seems excessively optimistic for now.

Ether has entered an ascending channel on Sep. 20, which points to $5,000 becoming a support level by late Nov.

*Ether price in USD at Kraken. Source: TradingView*

Backing the recent strength is the net value locked growth, or adjusted TVL, on Ethereum network smart contracts. TVL measures the assets deposited on decentralized applications and is usually led by lending protocols and DEX exchanges.

*Ethereum network adjusted total value locked (TVL) in USD. Source: DeBank.com*

Ether’s TVL breached the previous $71 billion all-time high on Oct. 16, accumulating a 50% gain in three months until Oct. 31.

Adverse regulatory winds coming from the United States lawmakers could be driving investors away from cryptocurrencies. Many U.S. states, including Kentucky, Texas, Alabama, Vermont, New Jersey and most recently, New York, have been cracking down on crypto lending.

Furthermore, in October, New York-based decentralized prediction market Polymarket came under investigation from the United States Commodity Futures Trading Commission (CFTC). According to a Bloomberg report on Oct. 23, the agency is evaluating whether the decentralized finance (DeFi) application allows its customers to trade binary options and swaps without the necessary regulator approval.

On the other hand, some investors expect a positive movement from traditional markets to further boost the rally. Data shows that November has been the best performing month for the S&P 500 since 1985.

Pro traders believe ETH price will move higher

To confirm investors' confidence in the $5,000 prophecy coming true, one should monitor the monthly contract's premium, known as "basis." Unlike the perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will vastly differ from regular spot exchanges.

By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market. Whenever there's excessive buyers optimism, the three-month futures contract will trade at a 15% or higher annualized premium (basis).

*Ether 3-month futures basis rate. Source: Laevitas.ch*

Notice how not even the 9.5% correction on ETH price on Oct. 27 from $4,300 to $3,900 was enough to break those traders' spirits. Currently, the basis rate stands at 17%, which signals moderate bullishness.

Options markets show moderate bullishness

Ether made an all-time high at $4,460 on Oct. 29 and to determine how optimistic traders are we have to look at the 25% delta skew. This indicator provides a reliable "fear and greed" analysis by comparing similar call (buy) and put (sell) options side by side.

The metric will turn positive when the neutral-to-bearish put options premium is higher than similar-risk call options. This situation is usually considered a "fear" scenario. On the other hand, a negative skew translates to a higher cost of upside protection and points toward bullishness.

*Deribit Ether 60-day options 25% delta skew. Source: laevitas.ch*

The above chart shows the indicator at negative 9, flirting with the "greed" momentum. That optimistic stance started on Oct. 18, which wasn't exactly a positive day for Ether because it tested the $3,700 support multiple times.

Both derivatives indicators sit on the edge of a neutral-to-bullish zone, which should be interpreted as highly positive as it leaves room for buyers' leverage using derivatives instruments.

According to futures and options metrics, perma-bulls calling for $5,000 are likely to be correct in the short term.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bulls fight to keep Ethereum price above $4K ahead of Friday’s $435M options expiry

October 22, 2021 Coin Telegraph

Bulls fight to keep Ethereum price above K ahead of Friday’s 5M options expiry

Coin Telegraph

ETH price failed to overcome its previous all-time high, but derivatives data signals that bulls will try their best to keep the price above $4,000 for the short-term.

Ether (ETH) flirted with its $4,380 all-time high on Oct. 21 but failed to breach it by a few dollars. Some analysts, including independent market analyst Scott Melker, believe that an exchange-traded fund (ETF) approval is the next logical step for the U.S. Securities and Exchange Commission (SEC).

My bet is we will see an Ethereum Futures ETF before we see a physical Bitcoin ETF.
— The Wolf Of All Streets (@scottmelker) October 20, 2021

However disappointed Ether bulls might be, they are likely to score a $78 million profit on Oct. 22's options expiry. Bears were apparently caught off-guard as Ether accumulated a 35% gain month-to-date.

*Ether price at Bitstamp in USD. Source: TradingView*

Investor sentiment was also positively impacted by the pension fund for firefighters in Houston, which announced a $25 million allocation in Bitcoin (BTC) and Ether.

The constant reduction of Ether's liquid supply is also a key factor behind the recent rally. According to Glassnode data, the Ether balance on exchanges reached a 2-year low.

*Ether balance on exchanges. Source: Glassnode*

Having fewer coins deposited on exchanges, especially for Ether, could mean that investors are moving to decentralized finance (DeFi) in search of better yields. Although it doesn't prevent anyone from selling, this movement does create incentives for long-term holding, and so does the ETH 2.0 stake to become a validator.

Bears were stunned after Ether broke $4,000

Ether was trading below $3,000 just three weeks ago and this partially explains why bears placed 89% of their bets on Ether trading at $4,000 or lower on Oct. 22.

Friday's expiry total open interest is represented by $230 million calls (buy) options stacked against $195 million puts (sell) options, a 27% lead for the neutral-to-bullish instruments. Still, this generalistic view needs further detail, depending on the expiry price.

*ETH options aggregate open interest for Oct. 22. Source: Bybt.com*

The current long-to-short metric is deceptive because the recent Ether rally will likely wipe out most of their bearish bets. For example, if Ether's price remains above $4,000 at 8:00 am UTC on Friday, only $22 million of the put (sell) options will be available.

Bears need sub-$4,000 to balance the scales

Any expiry price above $4,000 favors the bulls, although most damage occurs above $4,200 as their net profit increases to $136 million.

Below are the four likeliest scenarios considering the current price levels. The data shows how many contracts will be available on Oct. 22 for both bulls (call) and bear (put) instruments.

Between $3,600 and $4,000: 15,640 calls vs. 14,340 puts. The net result is neutral.
Between $4,000 and $4,200: 25,000 calls vs. 5,440 puts. The net result favors bulls by $78 million.
Between $4,200 and $4,400: 34,180 calls vs. 1,890 puts. Bulls' profit increases to $136 million.
Above $4,400: 44,230 calls vs. 60 puts. Bulls completely dominate by profiting $186 million.

As shown above, the imbalance favoring either side represents the potential theoretical profit from the expiry.

This crude estimate considers call (buy) options used in bullish strategies and put (sell) options exclusively in neutral-to-bearish trades. However, a trader could have sold a put option, effectively gaining a positive exposure to Ether above a specific price. Unfortunately, there's no easy way to estimate this effect.

$4,000 is likely to hold, at least until Friday's expiry

Bears need a 3% correction from the current $4,100 price to avoid a $78 million loss. Although it might not seem much at first, traders must also account for recent positive newsflow and on-chain metrics.

With less than 10 hours ahead of the Oct. 22 expiry, bulls are likely to secure a win by keeping Ether above $4,000. As for the bears, focusing on the $1.1 billion monthly expiry on Oct. 29 seems to be the most logical route.

Derivatives data favors Ethereum bulls even with this week’s crash below $3K

September 24, 2021 Coin Telegraph

<div>Derivatives data favors Ethereum bulls even with this week's crash below K</div>

Coin Telegraph

Losing the $3,000 mark just days before Friday's $1.55 billion ETH options expiry nearly doomed Ether longs, but derivatives data shows bulls are still in favor.

Ether (ETH) has been in a bearish trend since early September, and this week's Evergrande-led market crash drove the price below $2,700 on Sept.20, its lowest level in 47 days. Curiously, just three weeks ago, Ether was testing the $4,000 psychological barrier, but this changed after mounting crypto regulatory concerns and the fear of China's debt markets triggering a global sell-off intensified.

This week U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler spoke to the Washington Post about renewed plans to regulate the crypto sector and the growing stablecoin market.

Ether's negative price trend reversed on Sept. 22 after U.S. Federal Reserve Chairman Jerome Powell confirmed the continuation of the central bank's monthly bond purchasing program. Powell also made clear that no interest rate hike should be expected in 2021.

Even though the current $3,000 level represents a 25% retraction from the recent $4,000 peak, Ether price still reflects a 215% gain in 2021 and the network's adjusted total value locked (TVL) jumped from $13 billion in 2020 to $60 billion, signaling strong adoption despite surging gas fees.

*Bitcoin options aggregate open interest for Sept. 24. Source: Bybt.com*

As shown above, bulls got caught by surprise because 72% of call (buy) instruments were placed at $3,200 or higher. Consequently, if Ether remains below that price on Friday, only $260 million worth of neutral-to-bullish call options will be activated on the expiry.

A call option is a right to sell Bitcoin at a predetermined price on the set expiry date. Thus, a $3,200 cut option becomes worthless if Ether remains below that price at 8:00 am UTC on Sept. 24.

Bulls still have an advantage in Friday's $1.55 billion expiry

The 1.48 call-to-put ratio represents the difference between the $920 million worth of call (buy) options versus the $620 million put (sell) options. This bird's eye view begs a more detailed analysis because some bets are far-fetched considering the current $3,000 level.

Below are the four most likely scenarios considering the current Ether price. The imbalance favoring either side represents the theoretical profit from the expiry. The data below shows how many contracts will be activated on Friday, depending on the ETH price:

Between $2,700 and $2,900: 61,900 calls vs. 72,000 puts. The net result is $27 million favoring the protective put (bear) instruments.
Between $2,900 and $3,000: 79,900 calls vs. 52,200 puts. The net result is $80 million favoring the call (bull) options.
Between $3,000 and $3,200: 82,500 calls vs. 37,300 puts. The net result is $136 million favoring the call (bull) options.
Above $3,200: 99,600 calls vs. 20,200 puts. The net result favors the call options by $255 million.

This raw estimate considers call options being exclusively used in bullish strategies and put options in neutral-to-bearish trades. However, investors typically use more complex strategies that involve different expiry dates. Moreover, there is no way to know if the arbitrage desks are fully hedged.

To win, bears need to keep Ether below $2,900

These two competing forces will show their strength, and the bears will try to minimize the damage. On the other hand, the bulls have decent control over the situation if the Ether price remains above $3,000.

The most important test will be the $2,900 level because bears have significant incentives to suppress the price at this level, even if momentarily. Although there's still room for additional volatility ahead of the expiry, the bulls seem to be better positioned.

Ethereum traders expect volatility ahead of Friday’s $820M options expiry

August 25, 2021 Coin Telegraph

Ethereum traders expect volatility ahead of Friday’s 0M options expiry

Coin Telegraph

Overly-confident Ethereum options traders are nervously watching the $3,200 level ahead of this week’s $800 million ETH options expiry.

Ether (ETH) will face a critical $820 million monthly options expiry on Friday, Aug. 27. That will be the first time that $3,000 and higher options will have a real fighting chance, even though bulls seem to have missed a good opportunity to dominate the expiry because they were too optimistic about Ether’s price potential.

It is unclear why $140 million of the neutral-to-bullish call options were placed between $3,800 and $8,000, but these instruments will likely become worthless as the monthly expiry approaches.

Competition and the success of interoperability-focused protocols impact Ether price

The Ethereum network has struggled due to its own success, which consistently leads to network congestion and transaction fees of up to $20 and higher. Furthermore, the rise of nonfungible tokens and decentralized finance imposed further stress on the network.

Maybe some of the inflow that was supposed to move Ether price up went to its competitors, which presented stellar performances recently. For example, Cardano (ADA) surged over 100% quarter-to-date as investors expect its long-awaited smart contracts to launch on Sept. 12.

Solana (SOL), another smart contract contender, captured one-third of the inflows to crypto investment products over the last week, according to CoinShares “Digital Asset Fund Flows Weekly.”

Lastly, layer-two scaling solutions like Polygon (MATIC) have also seen 150% gains after successfully bringing DeFi projects into its interoperability pool and launching a decentralized autonomous organization (DAO) to scale projects on the software development kits.

*Ether options aggregate open interest for Aug. 27. Source: Bybt.com*

Notice how the $3,000 level vastly dominates Friday’s expiry with 30,900 ETH option contracts, representing a $100 million open interest.

The initial call-to-put analysis shows a slight prevalence of the neutral-to-bullish call instruments, with 13% larger open interest. However, bears seem to have been taken by surprise because 83% of their bets have been placed at $2,900 or lower.

To succeed, bears need to push and hold Ether price below $2,900

Nearly half of the neutral-to-bullish call options have expiry prices set at $3,500 or higher. These instruments will become worthless if Ether trades below that price on Friday. The options expiry happens at 8:00 am UTC, so traders might expect some price volatility nearing the event.

Below are the three most likely scenarios that will likely happen and their estimated gross result. Keep in mind that some investors could be trading more complex strategies, including market-neutral ones that use calls and protective puts. Consequently, this estimation is somewhat rudimentary.

The simplistic analysis weighs the call (buy) options against the put (sell) options available at each strike level. So, for example, if Ether’s expiry happens at $3,050, every neutral-to-bullish call option above $3,000 becomes worthless.

Below $2,900: 36,360 calls vs. 32,700 puts. The net result is virtually balanced.
Between $2,900 and $3,000: 36,770 calls vs. 20,320 puts. The net result favors the neutral-to-bullish instruments by $48 million.
Between $3,000 and $3,200: 55,660 calls vs. 8,320 puts. The net result favors the neutral-to-bullish instruments by $147 million.
Above $3,200: 62,260 calls vs. 1,490 puts. The net result favors the neutral-to-bullish instruments by $197 million.

Bears will try to minimize the damage, and luckily for them, the honeypot for a favorable price move doesn’t look worthwhile of a significant effort from bulls.

As for the excessively optimistic options traders, they should better rethink their strategy for the September expiry. The Ethereum network seems to be its own biggest enemy because the increasing adoption has fueled the rise in competitors’ decentralized finance applications.

Buy the rumor, sell the news? $10K Ethereum options are 88% down from their peak price

July 7, 2021 Coin Telegraph

Buy the rumor, sell the news? K Ethereum options are 88% down from their peak price

Coin Telegraph

$10,000 Ethereum options for December 2021 cost buyers $734 each, but today they are only worth $85 and ETH price is 47% away from its all-time high.

This year's 500% accumulated gain took Ether's (ETH) price to a $4,380 all-time high on May 12, and this rally was even more robust than the late-2017 move. The famous bull market, or bubble, depending on how you see it, took Ether's price on a 390% rally from $290 in November 2017 to $1,420 in mid-January 2018.

Maybe this year's mega rally was a DeFi and NFT bubble that will take another two years to reclaim its peak, but it seems premature to make a prediction now. However, some analysts, including Celsius Network CEO Alex Mashinsky, argue that Ether's "flippening" has already happened when comparing the breadth of assets under management.

According to Mashinsky, Ether's primary use case is yield farming, the practice of staking or locking up crypto in return for rewards, while Bitcoin is mostly used as a store of value.

The expectation of increased scaling is another reason that leads Ether investors to remain bullish despite the current price being 47% below its all-time high. Furthermore, on July 1, global auditing giant Ernst & Young released the third iteration of its zero-knowledge proof Ethereum scaling solution called Nightfall 3.

Nightfall 3 uses zk-Rollups, a layer-two scalability consisting of batched transfers 'rolled' into one transaction, to improve transaction efficiency and privacy on the Ethereum network. According to the study, it will likely result in a 90% gas fee reduction.

Options price premium can reduce daily

Regardless of how bullish Ether investors are, the closer an options contract comes to the expiry date, the smaller the premium becomes. This effect means that the fewer days to reach a target price significantly reduces its odds.

*Ether $10,000 call option for Dec-31 at Deribit, in ETH. Source: Deribit*

The above chart shows Ether's $10,000 call (buy) option for year-end, peaking at 0.177 ETH on May 14. At that time, Ether was trading at $4,150, so each option was priced at $734.

Keep in mind that this option will be worthless if Ether trades below $10,000 on Dec. 31 at 8:00 am UTC. Even if the price reaches $9,950, the option buyer would have wasted his $734 upfront. Therefore, a 160% upside was needed for such call option holders to become profitable.

Not every $10,000 option trader is reckless

Cointelegraph previously explained how professional traders use call options in strategies involving multiple expiry dates, so the $10,000 Ether option trades should not be interpreted as merely speculative bullish bets.

For traders looking to profit from market distortions, selling the $10,000 call option is an excellent way for holders to generate some yield, plus the initial margin required is roughly 10%, which allows some leverage.

For example, if one bought the $6,000 Ether call option contract for Dec. 31 they could deposit 0.20 Ether and sell 1 contract to potentially collect the 0.073 ETH premium.

This generates a 36.5% return in 6 months, which is equivalent to an 86% APY. However, unless a substantial margin amount is deposited, the seller of a call option runs the risk of being liquidated if Ether price hikes.

The same exact trade will offer much higher returns during bullish markets because the call options premium tends to increase.

Ethereum bulls maintain control ahead of Friday’s $730M ETH options expiry

May 13, 2021 Coin Telegraph

Ethereum bulls maintain control ahead of Friday’s 0M ETH options expiry

Coin Telegraph

Traders bullish on Ether have a $109 million advantage heading into the $730 million ETH options expiry on May 14.

Ether (ETH) initiated a rally on April 25, which resulted in a 90% gain that pushed the price to $4,200. The non-stop action has been fueled by an incredible increase in decentralized finance (DeFi) applications where the net locked value surpassed $74 billion, a 51% increase in eighteen days.

This positive momentum has been decimating the neutral-to-bearish put (sell) options, giving bulls even more incentives to continue the rally. On May 14, a total of $730 million Ether options are set to expire, and bulls have complete control as the call (buy) options are in the majority.

*Daily DEX volume on Ethereum network, USD. Source: DeBank*

Record-high decentralized exchange (DEX) trading volume also took place on May 9, surpassing $5 billion. That's roughly the daily average volume of Coinbase exchange and a 150% increase from the previous month.

At a first glance, the data favors bears

Regardless of the reasons for Ether's rally, the weekly options expiry gained relevance as open interest grew. This data means traders should not discard the importance of the 176,000 Ether option contracts set to mature on May 14.

*ETH May 14 options open interest by strike, number of contracts. Source: Bybt*

76,700 call (buy) option contracts remain open for Friday's expiry, currently worth $228 million. The buyer of a call option can acquire Ether for a fixed price on a set future date. As a result, this instrument is more frequently used on neutral-to-bullish strategies.

On the other hand, put (sell) options provide the buyer with the ability to protect from negative price swings. Therefore, these are required for neutral-to-bearish strategies and currently total 99,000 contracts for May 14, a $371 million open interest.

Digging a little deeper provides a different result

These numbers reflect a bearish scenario at first, as shown by the 0.77 call-to-put ratio. However, having the right to sell Ether at $3,200 on Friday isn't very helpful, causing these options to trade below $12.

The recent bull run caused 85% of the put options underwater, as only 16,000 Ether contracts exist at $3,700 strikes and higher.

This $60 million open interest seems irrelevant, facing the 45,000 call options aiming at $3,800 or lower. Those are currently worth $169 million, giving the bulls a net $109 million advantage.

Bears have little to gain from pushing the price down

If the bears somehow manage to push the price below $3,500 on Friday at 8:00 AM UTC, this would reduce their disadvantage by $86 million. Thus, they have incentives to suppress the price, at least for Friday's expiry.

As for a longer-term view, unless there's pressure coming from the regulatory front in the United States, the path for $5,000 Ether is still a clear target for bulls.

Investors and market makers are currently keeping a close eye on SEC chairperson Gary Gensler, although no deadline has been set despite recent remarks to Congress.

Ethereum Options Trade Volume Exceeds Bitcoin’s, Deribit Introduces a $50K ETH Strike for 2022

May 12, 2021 Bitcoin.com

Bullish sentiment begins to fade after Ethereum all-time high at $4,200

May 11, 2021 Coin Telegraph

Bullish sentiment begins to fade after Ethereum all-time high at ,200

basis

Ethereum price soared to $4,200 but derivatives data reflects a decline in the bullish sentiment of Ether futures and options traders.

The last couple of weeks have been nothing short of astonishing for Ether (ETH), as the cryptocurrency hiked over 80% to reach a $4,200 all-time high. Even after a 7% correction, the gains accumulated in 2021 surpass 300%, and Ether currently holds a market capitalization that exceeds $450 billion.

In the face of such a mind-blowing performance, neither the futures contracts premium nor the options fear and greed indicator signal extreme optimism in the market. This data will likely lead some analysts to question whether traders are losing confidence in Ether's future price prospects.

*Ether price at Coinbase, USD. Source: TradingView*

Citing the rationale for the current bull run would result in a long list, including the CME futures launch, the European Investment Bank's "digital bond" sale, the Berlin upgrade, and EIP-1559 block-elasticity, plus the bullish expectations being forecast over the upcoming fee burning expectations.

The fact that decentralized applications reached $90 billion in net value locked while crypto exchange Ether balances dropped to record lows adds additional demand for Ether and supports the current bullish narrative.

Professional traders also signaled interest as Ether futures open interest rose above $10 billion. At the same time, VanEck's SEC filing for an ETH exchange-traded fund (ETF) further proves that the bullish outlook for Ether remains strong.

Ether's futures premium is below the recent average

To confirm whether investors' confidence dropped as Ether reached its all-time high, one should monitor the monthly contracts premium, known as the basis. Unlike perpetual contracts, these fixed-calendar futures do not have a funding rate. Therefore their price will vastly differ from regular spot exchanges.

By measuring the price gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market. Whenever there's excessive optimism from buyers, the three-month futures contract will trade at a 20% or higher annualized premium (basis).

*OKEx 3-month Ether futures basis. Source: Skew*

As depicted above, the current 23% annualized premium is below average and far off from the April 13 peak at 47%. Around that time, Ether had accumulated a 52% gain in three weeks as it approached $2,400.

A 23% basis level flirts with extreme optimism, but considering the recent rally, one would expect a much higher number. Therefore, one should also evaluate how options traders are pricing the downside risk.

The primary risk indicator for options is neutral

To assess a trader's optimism level after Ether painted the $4,200 all-time high, one should look at the 25% delta skew. This indicator provides a reliable "fear and greed" analysis by comparing similar call (buy) and put (sell) options side by side.

*30-day Ether options 25% delta skew. Source: laevitas.ch*

The above chart shows the indicator at negative 10, which is considered a neutral-to-bullish zone. As it gravitates towards negative 20, it is usually considered a "greed" momentum, which took place on May 9 as Ether marked its all-time high.

Both derivatives indicators sit on the edge of a neutral-to-bullish zone, something unusual after a steady and positive performance. Therefore, one can conclude that there is literally no 'over-excitement' from pro traders.

Some might say it's a "glass half full" point of view regarding the potential buyers' leverage opportunity.

However, the same data can be interpreted as a lack of confidence from pro traders, fueling bears' hopes of an eventual correction in Ether price. Unfortunately, there's no way to tell right now as it remains unclear how soon the Ethereum fees problem can be solved.

he views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Ethereum bulls control 100% of this week’s $470M ETH options expiry

May 3, 2021 Coin Telegraph

<div>Ethereum bulls control 100% of this week's 0M ETH options expiry</div>

Coin Telegraph

Ether's spectacular rise to $3,300 has rendered all of the bearish put options worthless ahead of this Friday's $470 million expiry.

On May 7, a total of $470 million in Ether (ETH) options are set to expire, and "slaughter" is really the only word that describes what is about to happen to bearish ETH traders.

Currently, almost every single one of the 75,909 put (sell) option contracts will become worthless if Ether manages to remain above $3,100 until Friday 8:00 am UTC.

Ether's growth has been fueled by the growth of decentralized finance (DeFi), which has recently surpassed $60 billion in total value locked, according to DeBank. Yat Siu, chairman and co-founder of Animoca Brands, perfectly described the scene:

"DeFi will shape finance in incredibly fundamental ways. Perhaps the biggest way (including in China) is in financial education."

Siu added:

"Imagine a world where financial inclusion is not just about having a bank account, but about being able to easily and effectively participate in various capital opportunities."

While this may have sounded futuristic one year ago, the Ethereum network opened the doors for these markets in a very short time.

Regarding May 7's options expiry, the neutral-to-bearish puts currently have a $250 million open interest but tend to become worthless as the settlement day approaches.

*Ether May 7 aggregate options expiry by strike. Source: Bybt*

While the apparent put-to-call ratio favors the more bearish Ether put options by 13%, when analyzing the target price (strike) for those derivatives, the activity above $3,100 is nonexistent. Ether's 55% rally over the past 30 days caught bears by surprise as the protective puts mainly focused on $2,800 and lower.

Bulls, on the other hand, are usually highly optimistic. The call option contracts have a 66,350 open interest, equivalent to $220 million. Currently, 13.5% of those neutral-to-bullish options contracts have strikes of $3,200 and higher.

However, considering that the call options completely dominate above $2,700, bulls have incentives to positively pressure the price as the May 7 deadline approaches. Unlike futures markets, there are few benefits to rolling over contracts that are now almost worthless.

*Pricing on Ether put options for May 7. Source: Deribit*

As shown above, the $2,450 and lower-strike ETH put options are offered below $10 each. Meanwhile, some of them don't have any bids at all; therefore, for Ether bears, it makes sense to throw in the towel for this week's expiry instead of wasting resources to salvage the poorly cast bets.

For those questioning Ether's current valuation, Cointelegraph recently showed how the cryptocurrency might be less risky than holding traditional dividend-paying stocks such as Roche or Procter & Gamble.

Moreover, the spectacular growth of decentralized applications and daily Ethereum network transfers and transactions should fuel Ether bulls to aim even higher for the end-of-month expiry.

Bulls push Ethereum price higher ahead of Friday’s $930M options expiry

April 27, 2021 Coin Telegraph

Bulls push Ethereum price higher ahead of Friday’s 0M options expiry

Coin Telegraph

Bulls have a $115 million lead on Friday's $930 million Ethereum options expiry, a signal that ETH could be en route to new all-time highs.

The last couple of weeks have been nothing short of a roller coaster for Ether (ETH), which oscillated between $2,000 and a record-high $2,650. The 20% crash on April 17 caused a $1 billion liquidation on long futures contracts, and it also drastically reduced investors' appetite for risk.

*Ether (ETH) USD price at Coinbase. Source: TradingView*

However, as displayed above, the 28% gain over the last couple of days caused the open interest on Ether futures to reach $8.2 billion, which is just 5% below its April 15 record. A similar event took place in the options markets, which have grown by 45% since the March 25 expiry.

The recent price recovery has been attributed to Paypal's CEO stating that demand for cryptocurrencies has been multiple-fold higher than expected. Moreover, the net value locked in Ethereum smart contracts reached a record-high $54.2 billion, led by Uniswap, Compound, and Maker.

*Ethereum network Net Value Locked. Source: DeBank.com*

The 154% increase in this metric happened while network fees sustained levels above $8 per transaction, therefore easing speculation of predatory competition. Meanwhile, Binance Smart Chain reached a $17 billion TVL, and the decentralized finance (DeFi) growth seems more than enough to support both.

Open interest soared, but 22% of it is about to mature

While the current $4.2 billion Ether options open interest represents an all-time high, $930 million of these are set to expire on April 30. As usual, Deribit exchange reigns supreme with a 90% market share.

It is worth noting that not every option will trade at expiry, as some of those strikes now sound unreasonable, especially considering there are less than three days left.

Options are divided into two segments, as the call (buy) options allow the buyer to acquire Ether at a fixed price on the expiry date. These are often used on either neutral arbitrage trades or bullish strategies.

Meanwhile, the put (sell) options are the preferred instrument for hedging to gain protection from negative price swings.

To understand how these competing forces are balanced, one should compare the calls and put options size at each expiry price (strike).

*April 30 ETH options at Deribit. Source: Laevitas.ch*

A weird pattern emerged as bears were caught by surprise, with 91% of the put options open interest at $2,400 or lower. Meanwhile, bulls were overly optimistic, with nearly half of those call options at $2,880 and above.

Bulls have a decent $115 million lead

However, any expiry above $2,240 is highly favorable for the bulls who currently lead with a $115 million open interest. This difference favoring call options would double at $2,880, although this doesn't seem to justify a 10% hike in Ether price.

As for the bears, this game seems utterly lost as only a miracle 17% drop below $2,240 would be enough to eliminate the call options advantage.

At the moment, there is little reason to believe that the April 30 options expiry will bring any surprise for Ether price. Both Deribit and OKEx settle at 8:00 AM UTC, and the focus of traders is likely to just move on to June options.

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ETH Options