Ethereum price dips below the $1.8K support as bears prepare for Friday’s $1B options expiry

May 26, 2022 Coin Telegraph

Ethereum price dips below the .8K support as bears prepare for Friday’s B options expiry

Looming macroeconomic concerns and this week’s $1B ETH options expiry threaten to pin Ethereum price under the $1,800 support.

Ether's (ETH) performance over the past three months has been less than satisfying for holders and the 50% correction since April 3 caused the altcoin to test the $1,800 support for the first time since July 2021.

*Ether/USD 1-day chart at Kraken. Source: TradingView*

Due to the volatility in stocks, investors had been seeking shelter in the United States dollar and on May 13 the DXY index reached its highest level in 20 years. DXY measures the USD against a basket of major foreign currencies, including the British Pound (GBP), Euro (EUR) and Japanese Yen (JPY).

Moreover, the 5-year U.S. Treasury yield reached its highest level since August 2018, trading at 3.10% on May 9 and signaling that investors demand larger returns to compensate for inflation. In a nutshell, macroeconomic data reflects risk-averse sentiment from investors and this partially explains Ether's downturn.

Further creating panic among Ether traders was a 7-block chain reorg on Ethereum's Beacon Chain on May 25. A valid transaction sequence was knocked off the chain due to a competing block getting more support from network participants. Fortunately, this situation is not uncommon and it might have emerged from a miner with high resources or a bug.

The main victim of Ether’s 11% price correction was leverage traders (longs) who saw $160 million in aggregate liquidations at derivatives exchanges, according to data from Coinglass.

Bulls placed their bets at $2,100 and higher

The open interest for the Ether’s May monthly options expiry is $1.04 billion, but the actual figure will be much lower since bulls were overly-optimistic. These traders might have been fooled by the short-lived pump to $2,950 on May 4 because their bets for the May 27 options expiry extend beyond $3,000.

The drop below $1,800 took bulls by surprise because virtually none of the call (buy) options for May 27 have been placed below that price level.

*Ether options aggregate open interest for May 27. Source: CoinGlass*

The 0.94 call-to-put ratio shows the slight dominance of the $540 million put (sell) open interest against the $505 million call (buy) options. Nevertheless, as Ether stands near $1,800, every bullish bet is likely to become worthless.

If Ether's price remains below $1,800 at 8:00 am UTC on May 27, none of the $505 million call options will be available. This difference happens because a right to buy Ether at $1,800 or higher is worthless if Ether trades below that level on expiry.

Bears aim for a $325 million profit

Below are the three most likely scenarios based on the current price action. The number of options contracts available on May 27 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $1,600 and $1,700: 0 calls vs. 230,000 puts. The net result favors the put (bear) instruments by $370 million.
Between $1,700 and $1,800: 50 calls vs. 192,300 puts. The net result favors bears by $325 million.
Between $1,800 and $2,000: 3,300 calls vs. 150,000 puts. The net result favors the put (bear) instruments by $280 million.

This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. Even so, this oversimplification disregards more complex investment strategies.

For instance, a trader could have sold a put option, effectively gaining positive exposure to Ether above a specific price, but unfortunately, there's no easy way to estimate this effect.

Bulls should throw the towel and focus on the June expiry

Ether bears need to sustain the price below $1,800 on May 27 to secure a $325 million profit. On the other hand, the bulls' best case scenario requires a push above $1,800 to reduce the damage by $45 million.

Ether bulls had $160 million leverage long positions liquidated on May 26, so they should have less margin to drive the price higher. With this said, bears will undoubtedly try to suppress Ether below $1,800 ahead of the May 27 options expiry.

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.

Leading Derivatives Exchange CME Group Launches Micro Bitcoin and Ether Options

March 31, 2022 Bitcoin.com

ETH derivatives show pro traders are worried about Ethereum’s $2.5K support

March 17, 2022 Coin Telegraph

ETH derivatives show pro traders are worried about Ethereum’s .5K support

Coin Telegraph

Ether’s price has been sideways for 27 days, but pro traders are not confident about the $2,500 support, according to derivatives.

Ether (ETH) investors are having a rough time in 2022, with ETH accumulating 25% losses year-to-date as of March 17. Still, the cryptocurrency has bounced multiple times near $2,500 over the past couple of months, signaling a solid support level.

*Ether/USD price at FTX. Source: TradingView*

On March 15, Ethereum developer Tim Beiko announced that the Kiln testnet — formerly Ethereum 2.0 — successfully passed the Ethereum “Merge.” The process involves taking Ethereum’s Execution Layer from the existing proof-of-work layer and merging it with the Consensus Layer from the Beacon Chain. The end goal is to turn the blockchain into a proof-of-stake network.

The United States Federal Open Market Committee (FOMC) increased interest rates to 0.50% on March 16 — the first such move since 2018. The monetary authority warned of persisting “upward pressure on inflation,” precisely the problem that cryptocurrencies’ digital scarcity aims to solve.

Investors fear that further rate hikes by the FOMC could have negative consequences on risk markets. For example, a higher cost of borrowing reduces economic stimulus, creating a hurdle for businesses’ expansion and consumer spending.

Regardless of its potential, Ether’s 80% historical volatility shifts most investors’ perception to see it as a risky asset that will inevitably succumb to an eventual broader market correction.

Ether futures show modest sentiment improvement

To understand how professional traders are positioned, one should look at Ether’s futures and options market data. Firstly, the basis indicator measures the difference between longer-term futures contracts and the current spot market levels.

The annualized premium of Ether futures should run between 5% and 12% to compensate traders for “locking in” the money for two to three months until the contract expires. Levels below 5% are extremely bearish, while numbers above 12% indicate bullishness.

*Ether 3-month futures’ annualized premium. Source: Laevitas*

The above chart shows that Ether’s basis indicator recovered from 2% on March 13 to the current 3.5%. However, such a level falls below the 5% threshold expected on neutral markets, signaling that pro traders are far from comfortable holding ETH futures longs.

Thus, one can assess that an eventual break of the $3,200 resistance will catch those investors off guard, creating strong buying activity to cover short positions.

Options traders fear ETH could drop lower

Ether’s daily closing price has been ranging from $2,500 to $3,000 for the past 27 days, making it difficult to discern a direction in the market. In that sense, the 25% delta skew is extremely useful, as it shows whether arbitrage desks and market makers are overcharging for upside or downside protection.

If those traders fear an Ether price crash, the skew indicator will move above 10%. On the other hand, generalized excitement reflects a negative 10% skew. That is precisely why the metric is known as the pro traders’ “fear and greed” metric.

*Ether 30-day options 25% delta skew: Source: Laevitas*

As shown above, the skew indicator has been over 10% since March 11, indicating fear, as these options traders are overcharging for downside protection.

Even though there was a modest improvement on Ether’s futures premium, the indicator remains on a bearish level. Considering the ETH options markets pricing a higher risk of downside, it is safe to conclude that professional traders are not confident that the current $2,500 support will hold.

However, not everything is lost for Ether bulls, as the cheap futures premium offers the opportunity to leverage long at a low cost. As long as the Ethereum network continues to advance on solving its scalability problem, it is still possible that the $3,200 resistance gets revisited considering the global macroeconomic uncertainty and inflation.

CME Group plans to launch micro-sized Bitcoin and Ether options

March 1, 2022 Coin Telegraph

bitcoin options

The futures options, expected to start trading on March 28, will come more than two years after the CME Group launched a BTC options trading product in January 2020.

Major derivatives marketplace Chicago Mercantile Exchange Group will launch options trading for its micro Bitcoin and Ether futures products.

In a Tuesday announcement, the CME Group said that subject to regulatory review, it plans to launch options contracts for its existing micro Bitcoin (BTC) and Ether (ETH) futures that will be 10% the size of the respective tokens. The futures options, expected to start trading on March 28, will come more than two years after the firm launched a BTC options trading product in January 2020 and more than four years since the group launched the first Bitcoin futures contract in December 2017.

“Building on the strength and liquidity of the underlying contracts, our micro-sized options will enable traders of all sizes to efficiently hedge market-moving events with greater precision and flexibility or fine-tune their cryptocurrency market exposure," said CME Group’s global head of equity and FX products, Tim McCourt.

Meet the newest additions to the CME Group Cryptocurrency product lineup ‒ Micro Bitcoin and Micro Ether options ‒ available for trading March 28. https://t.co/pPL9JRshkD
— CME Group (@CMEGroup) March 1, 2022

The micro Ether futures contract, which CME launched in December 2021, is sized at 0.1 ETH, while the Bitcoin futures contracts are sized at 0.1 BTC and have been trading since May 2021. According to the CME Group, the minimum block threshold for options are 10 contracts for micro BTC and 100 for micro ETH. Genesis Global Trading, Cumberland and Akuna Capital are expected to provide liquidity for the crypto investment vehicles.

The announcement came following the price of BTC rising more than 15% from the $38,000s to a 7-day high of $44,816. The ETH price experienced similar gains, moving to a two-week high above $3,000, according to data from Cointelegraph Markets Pro. The price movement could be related, in part, to the financial impacts of the Ukrainian war, which has resulted in speculation the Russian government may attempt to use digital assets to circumvent sanctions.

Bears target new lows for Ethereum as Friday’s $1.1B options expiry approaches

January 27, 2022 Coin Telegraph

Bears target new lows for Ethereum as Friday’s .1B options expiry approaches

Coin Telegraph

ETH bulls will need to keep searching for positive news, especially as bears apply extra pressure ahead of Friday’s $1.1 billion monthly options expiry.

Ether (ETH) price tumbled below the $3,000 support on Jan. 21 as regulatory uncertainty continues to weigh down the sector and rumors that the United States Securities and Exchange Commission is reviewing DeFi’s high-yield crypto lending products continue to circulate.

On Jan. 27, the Russian Finance Ministry submitted a crypto regulatory framework for review. The proposal suggests that crypto operations are carried out within the traditional banking infrastructure and that mechanisms to identify traders’ personal data are included.

Further bearish news came as Ryan Korner, a top special agent from the United States Internal Revenue Service (IRS) Criminal Investigation’s Los Angeles field office, issued negative remarks during a virtual event hosted by the USC Gould School of Law. According to Ryan, crypto is the “future,” but ”fraud and manipulation are still rampant in the space.”

Ether bulls are trying to determine whether the Jan. 24 drop to $2,140 was the final bottom for the current downtrend. This 47.5% correction in 30 days caused an aggregate of $1.58 billion in long futures contracts to be liquidated.

Notice how Ether’s price has been downtrending for 75 days, respecting a channel that currently holds $2,200 as a support level. On the other hand, a 19% price increase from the current $2,500 to the $3,000 resistance would not necessarily mean a trend reversal.

Curiously, call (buy) option instruments vastly dominate Friday’s $1.1 billion expiry, but bears are better positioned after Ether price stabilized below $3,000.

Ether options aggregate open interest for Jan. 28 expiry. Source: CoinGlass

A broader view using the call-to-put ratio shows an 82% advantage to Ether bulls because the $680 million call (buy) instruments have a larger open interest versus the $410 million put (sell) options. However, the 1.82 call-to-put indicator is deceptive because the price drop below $3,000 caused most bullish bets to become worthless.

For example, if Ether’s price remains below $2,500 at 8:00 am UTC on Jan. 28, only $57 million worth of those call (buy) options will be available. That effect happens because there is no value in the right to buy Ether at $2,500 if it is trading below this level.

Data suggests bulls are set for a significative loss

Below are the three most likely scenarios based on the current price action. The number of options contracts available on Friday for bulls (call) and bear (put) instruments vary depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:

Between $2,200 and $2,400: 3,200 calls vs. 121,500 puts. The net result is $270 million favoring the put (bear) instruments.
Between $2,400 and $2,700: 19,500 calls vs. 95,500 puts. The net result favors bears by $190 million.
Between $2,700 and $2,900: 34,700 calls vs. 73,400 puts. The net result favors the put (bear) options by $110 million.

This crude estimate considers the call options used in bullish bets and the put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.

For instance, a trader could have sold a call option, effectively gaining a negative exposure to Ether above a specific price. But unfortunately, there’s no easy way to estimate this effect.

Bears will try to hold ETH below $2,400

Ether bears need a gentle push below $2,400 to score a $270 million profit on Friday. On the other hand, bulls would need an 8.4% price recovery from the current $2,500 to reduce their loss by 58%.

Considering the bearish regulatory newsflow, Ether bulls are unlikely willing to add more risk right now. Therefore, bulls should concentrate their efforts to partially salvage this defeat by keeping Ether price above $2,500, resulting in a $170 million loss.

January seems to have given Ether bears the upper hand in keeping the pressure on the price in the short term.

Here’s why Ethereum traders could care less about ETH’s current weakness

December 18, 2021 Coin Telegraph

basis

ETH price could hit new lows near $3,600, but derivatives data suggests pro traders still feel bullish.

Since hitting an all-time high at $4,870 on Nov. 10, Ether (ETH) price has been posting lower lows over the past 50 days. If this downtrend continues, the lower trendline support suggests that the altcoin will bottom at $3,600. Still, derivatives data is signaling that pro traders are not concerned about the seemingly bearish market structure.

Ether/USD price on FTX. Source: TradingView

Notice how the price peaks are getting lower on the 12-hour time frame as mounting regulatory concerns drive investors away from the sector. In a press conference on Dec. 17, Russia's Central Bank governor, Elvira Nabiullina, stated that banning crypto in the country is "quite doable."

Nabiullina cited crypto's frequent use for illegal operations and significant risks for retail investors. Russian President Vladimir Putin also recently criticized cryptocurrency by saying they are not backed by anything. Interestingly, the country plans to launch its own central bank digital currency even as the Russian ruble lost 44% against gold over the past four years.

In the United States, a bipartisan group of U.S. senators has called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill relating to the crypto tax reporting requirements. Under the current broader "broker" definition, miners, software developers, transaction validators and node operators will likely be required to report digital asset transactions worth more than $10,000 to the Internal Revenue Service.

Even with the regulatory uncertainty and negatively skewed price action, traders should monitor the futures contracts premium — also known as the "basis rate" — to analyze how bullish or bearish professional traders are.

Pro traders are neutral despite the price weakness

The basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets. This price gap is caused by sellers demanding more money to withhold settlement longer.

However, a red alert emerges whenever this indicator fades or turns negative, also known as "backwardation."

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

Notice how the sharp decrease after the 24% intraday crash on Dec. 3 caused the annualized futures premium to reach its lowest level in two months. After the initial panic, the Ether futures market recovered to the current 9% level, which is close to the middle of the "neutral" range.

To confirm whether this movement was specific to that instrument, traders should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent because the protective put options premium is higher than similar risk call options.

When market makers are bullish, the 25% delta skew indicator shifts to the negative area, and readings between negative 8% and positive 8% are usually deemed neutral.

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

For the past three weeks, the 25% delta skew ranged between a positive 3 and 8 which is in the neutral zone. Consequently, options market data validate the sentiment seen in futures markets and signals that whales and market makers are not worried about the recent price weakness.

If investors "zoom-out" a bit, they will see that Ether's year-to-date gains are at 300%, and this explains why pro traders are not worried about a 20% drop from the $4,870 all-time high.

Furthermore, the Ethereum network's total value locked in smart contracts doubled over the past six months to $148 billion. This data gives derivatives traders the confidence needed to remain calm even with the current short-term price weakness.

Ethereum bulls likely to profit $130 million on ETH options despite two-week slump

November 25, 2021 Coin Telegraph

Ethereum bulls likely to profit 0 million on ETH options despite two-week slump

Burn

$1.25 billion in ETH options expire on Nov. 26 and bulls are better positioned above $4,200.

Ether (ETH) investors have no reason to complain after the 344% gains accumulated in 2021 until Nov. 24. Still, analysts fear that the $4,000 resistance test on Nov. 19 is forming a descending channel that aims at $3,600 by mid-December, an 18% correction from the current $4,400 price.

Despite outperforming Bitcoin (BTC) by 16% in the past month alone and the ETH/BTC pair climbing to 10-week highs, Ether seems to be struggling with its own success.

*Ether/USD price on Bitstamp. Source: TradingView*

Users continue to complain about Ethereum gas fees, averaging over $45 over the past three weeks. However problematic that can be, it leaves no doubt that the largest decentralized finance (DeFi) and nonfungible tokens (NFT) markets continue to thrive on Ethereum.

Tried to buy something for $5 using eth.

The gas fees are $480.45.

How certain are we that an Airbnb product manager isn’t the creator of Ethereum? pic.twitter.com/G35F0o6keO
— Chris Bakke (@ChrisJBakke) November 17, 2021

Increasing regulatory uncertainties in the United States remain a decisive limiting factor for Ether's rally. On Nov. 24, the Securities and Exchange Commission, or SEC, clarified that the crypto panel in the public meeting scheduled for Dec. 2 would focus on the regulatory framework.

Not even the one million ETH burned since the implementation of EIP-1559 in August was enough to keep Ether's price at all-time highs. As the network emits about 5.4 million ETH per year, Ether remains an inflationary asset. Still, Ether's price increased by 16% vs. Bitcoin since Oct. 25, partially reflecting that impact.

Bullish calls dominate Friday's ETH options expiry

Despite the 10% correction to $4,400 since the $4,850 all-time high on Nov. 10, the Ether call (buy) options vastly dominate Friday's expiry.

*Ether options aggregate open interest for Nov. 26. Source: Coinglass*

The green area representing the $820 million call (buy) options is the lion's share of Nov. 26 expiry. Compared to the $440 million puts (sell) instruments, there's an 87% difference.

Nevertheless, the 1.87 call-to-put ratio should not be taken literally, as the recent ETH drop will likely wipe out 77% of the bullish bets. For instance, if Ether's price remains below $4,400 at 8:00 am UTC on Nov. 26, only $165 million worth of those call (buy) options will be available at the expiry.

In other words, what good is holding the right to buy Ether at $4,400 or $4,600 if it's trading below that price?

Bears need sub-$4,200 ETH to balance the scales

Below are the three most likely scenarios based on the current price action. The number of option contracts available on Nov. 26 for bulls (call) and bear (put) instruments vary depending on the expiry ETH price. The imbalance favoring each side constitutes the theoretical profit:

Below $4,100: 15,400 calls vs. 15,200 puts. The result is balanced.
Between $4,200 and $4,500: 38,400 calls vs. 8,800 puts. The net result is $130 million favoring the call (buy) instruments.
Above $4,500: 50,200 calls vs. 2,300 puts. The net result favors the call (bull) instruments by $215 million.

This crude estimate considers call options being used in bullish bets and put options exclusively in neutral-to-bearish trades. Still, this oversimplification disregards more complex investment strategies.

For example, a trader could have sold a put option, effectively gaining a positive exposure to Ether above a specific price. But unfortunately, there's no easy way to estimate this effect.

Both sides have incentives to move price

Bears need a 7.5% move from $4,400 down to sub-$4,100 to balance the scales and avoid a $130 million loss. On the other hand, bulls need a 2.3% price increase to $4,500 to boost their profits by $85 million.

Traders must consider that the amount of effort a seller needs to pressure the price is immense and usually ineffective during bullish markets. Currently, options market incentives are balanced, favoring the $4,200 to $4,500 price range, entitling bulls to a $130 million profit on Friday, Nov. 26.

Data shows Ethereum bulls expect a new ATH after Friday’s $1.25B ETH options expiry

October 28, 2021 Coin Telegraph

Data shows Ethereum bulls expect a new ATH after Friday’s .25B ETH options expiry

Altair

ETH price is on the cusp of a new all-time high and derivatives data shows bulls may attempt to capture it ahead of Oct. 29’s $1.25 billion Ethereum options expiry.

Ether (ETH) has gained 950% in 2021 and from the look of things, the altcoin has no intention of stopping. This can also be seen in the ultra-optimistic bets for October’s $1.25 billion options expiry. However, this phenomenon is not exclusive to Ether bulls.

The right to acquire Ether at a fixed price in the future does not come at a cheap price. On Sep. 4, the $5,000 call option for Oct. monthly expiry was trading at ETH 0.082 which is equivalent to $320. Unfortunately, for the bulls, these options are now worthless.

Gas fees on Ethereum transactions are still above $25 and this will continue to favor competitor blockchains with their own decentralized finance (DeFi) and nonfungible token (NFT) markets. Even with these high fees, the leading smart contract network still holds 80% or higher total value locked (TVL) and decentralized exchanges (DEX) volumes.

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

The bullish trend that initiated on Sep. 21 has been driving Ether price on a path to break its $4,380 all-time high in a couple of weeks.

Furthermore, Ether bulls will also be pleased to know that ETH 2.0's Altair upgrade was successful, with 99% of the nodes upgraded. This is the first upgrade since the Beacon Chain went online in December 2020 and the main changes include support for lightweight nodes and increased penalties for validators being offline.

Bulls were too optimistic, but they're still ahead

Based on the bullish expectations surrounding a Bitcoin (BTC) exchange-traded fund approval, it is now possible to understand why bulls placed 55% of their bets at $4,500 or higher. However, as the deadline for Oct. 29 expiry approaches, these call (buy) options quickly lost their value.

The October monthly expiry will be a strength test for bears because any price above $4,000 means a $205 million or higher profit for the bulls.

*Ether options aggregate open interest for Oct. 29. Source: Bybt*

As the above data shows, bears placed $535 million in bets for Oct. 29's expiry, but it appears that they were caught by surprise, as 96% of the put (sell) options are likely to become worthless.

In other words, if Ether remains above $4,100 on Friday's 8:00 am UTC expiry, only $12 million worth of neutral-to-bearish put options will be activated.

Bulls have a few reasons to keep Ether price above $4,200

Below are the four most likely scenarios for the Oct. 29 expiry. The imbalance favoring either side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:

Between $3,900 and $4,000: 35,100 calls vs. 9,800 puts. The net result is $100 million favoring the call (bull) instruments.
Between $4,000 and $4,200: 54,900 calls vs. 3,600 puts. The net result is $205 million favoring the call (bull) instruments.
Above $4,200: 66,300 calls vs. 600 puts. The net result is $275 million favoring the call (bull) instruments.

This raw estimate considers call options being exclusively used in bullish bets and put options in neutral-to-bearish trades. However, investors might have used a more complex strategy that typically involves different expiry dates.

Bears need a 7% price correction to reduce their losses

In each scenario, bulls have absolute control of this Oct. 29's expiry and there is good reason for them to keep the price above $4,200. On the other hand, bears need a 7% negative move from $4,270 to sub-$4,000 to avoid a loss of $205 million or higher.

Nevertheless, traders must remember that during bull runs, the amount of effort a seller needs to pressure the price is immense and usually ineffective. Moreover, derivatives data shows a considerable short-term advantage from call (buy) options that is fueling even more bullish bets for next week.

Ethereum price hits $3,800, boosting bulls’ control in Friday’s ETH options expiry

October 14, 2021 Coin Telegraph

<div>Ethereum price hits ,800, boosting bulls' control in Friday's ETH options expiry</div>

Coin Telegraph

ETH price recaptured the $3,800 level and derivatives data signals bulls are well-positioned for Friday's $385 million options expiry.

Ether (ETH) entered a slightly bullish channel earlier this month, and currently the price is marching toward the $3,800 level. Despite the recent turbulence, Ether bulls are set to bag a $53 million profit on this Friday's weekly options expiry.

Investors also appear to be disinterested in Ether's recent underperformance versus Bitcoin (BTC), and to date, the altcoin's gains stand at 265%. If Ether manages to stay above $3,600 on Friday, 99% of the $180 million put (sell) options will become worthless.

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

Ethereum smart contract competitors continue to pressure the leading network and at the time of writing, Ethereum's average gas fees remain above $20. Polkadot (DOT) is scheduled to begin its sidechain auctions on Nov. 11, and this will support new token launches, decentralized finance (DeFi) applications, Internet of Things (IoT) solutions, all going through trustless cross-network bridges.

This week, Binance Smart Chain revealed plans to launch a $1 billion fund to accelerate adoption across the entire crypto industry. Investors usually interpret potential incubation events backed by blockchain projects as bullish for their native assets and BNB price gained at least 30% since the announcement.

Bears were not expecting prices above $3,300

Based on recent mildly negative newsflow, it is possible to understand why bears placed 88% of their bets at $3,300 or lower. Had bulls been a little less greedy, they could have dominated Friday's $365 million expiry.

The Oct. 15 expiry is perfectly balanced between call (buy) and put (sell) options according to the long-to-short ratio. Still, this birdseye view needs further detail, depending on the expiry price.

*Ether Oct. 15 futures aggregate open interest. Source: Bybt*

At first sight, both sides hold some $180 million worth of Ether options, as indicated by the 1.03 call-to-put ratio.

However, this 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 $3,500 at 8:00 am UTC on Friday, only $6.6 million of the put (sell) options will be available.

Bulls are comfortable at $3,600

Any expiry price above $3,500 is a bear trap, although a $32 million advantage should not be enough to cause damage. To put things in perspective, Ether's monthly options expiry holds over $800 million open interest.

Below are the four likeliest scenarios considering the current price levels, as the imbalance favoring either side represents the potential theoretical profit from the expiry.

The data shows how many contracts will be available on Oct. 15 for both bulls (call) and bear (put) instruments.

Between $3,300 and $3,500: 7,450 calls vs. 3,550 puts. The net result favors bulls by $13 million;
Between $3,500 and $3,600: 11,150 calls vs. 1,900 puts. The net result favors bulls by $32 million;
Between $3,600 and $3,800: 15,400 calls vs. 600 puts. Bulls profit increases to $74 million.
Above $3,800: 27,450 calls vs. 0 puts. Bulls dominate by profiting $104 million.

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. But, unfortunately, there's no easy way to estimate this effect.

Bears need sub-$3,500 to balance the scales

Bulls' profit increases to $104 million with Ethereum trading above $3,800, thus a $30 million increase from the current $74 million estimated gain. On the other hand, there's a $61 million gain from the bear's perspective by pressuring the price below $3,500, as the above estimate shows.

With little over a day before the Oct. 15 expiry, the bears will have a hard time suppressing the current bull run. Regardless of the competition Ethereum network faces and the high gas fees, investors' demand for decentralized finance (DeFi) and NFTs seem to be enough to keep Ether in an uptrend.

Ethereum options data suggests the battle for $4K ETH is at least a week away

September 16, 2021 Coin Telegraph

Ethereum options data suggests the battle for K ETH is at least a week away

Coin Telegraph

Traders are long on Ethereum, but derivatives data suggests that $4,000 ETH is a long shot in the short term.

For the past 40 days, Ether (ETH) traded in a modest uptrend, respecting a narrow channel most of the time. The absolute leader of the smart contracts sector enjoyed a brief rally toward $4,000 in the first week of Sept., but a subsequent crash brought the price into the ascending channel.

During this time, NFTs posted record-breaking transactions in August, clogging the Ethereum network and causing average transaction fees to surpass $40 in early September. Although NFT trading volume has continued to subside in September, new items continue to be minted every minute regardless of whether they're being traded.

On Sept.13, Cathie Wood, CEO of Ark Invest, a $58 billion north-American asset manager, commented that Ark aims for a 60% Bitcoin and 40% Ether allocation. Ark Invest holds relevant positions in Coinbase (COIN) and Grayscale Bitcoin Trust (GBTC) shares. Furthermore, Wood has been a long-time Bitcoin advocate.

Ether investors might have gotten lucky as one of its largest rivals, Solana (SOL), faced a 7-hour blackout on Tuesday. The network was brought down by a sudden surge in transaction volume and flooded the transaction processing queue.

Another incident happened on Sept. 14, after the Ethereum layer-two rollup network Arbitrum One went offline for 45 minutes. The team attributed the downtime to a massive batch of transactions submitted to the Arbitrum sequencer over a short period of time.

*Bitcoin options aggregate open interest for Sept. 3. Source: Bybt.com*

These events point toward the importance of the ETH 2.0 upgrade, which will bring parallel processing and drastically reduce transaction fees. Curiously, Ethereum also faced a large invalid block sequence by some malicious entity. However, the vast majority of the network clients (software) rejected the unsuccessful attack.

As shown above, bears were caught by surprise and 95% of the put (sell) instruments have been placed at $3,500 or lower. Consequently, if ETH remains above that price on Friday, only $8 million worth of neutral-to-bearish put options will be activated on the expiry.

A put option is a right to sell Bitcoin at a predetermined price on the set expiry date. Thus, a $3,000 put option becomes worthless if ETH remains above that price at 8:00 am UTC on Sept. 17.

The call-to-put ratio reflects a balanced situation

The 0.95 call-to-put ratio represents the small difference between the $173 million worth of call (buy) options versus the $181 million put (sell) options. This bird's eye view needs a more detailed analysis that considers that some of the bets are far-fetched considering the current $3,500 level.

For example, if Ether's expiry price on Friday is $3,300, then every call (buy) option above that price becomes worthless. There will be no value for a right to acquire ETH at $3,700 in that case.

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 expiry price.

Between $3,100 and $3,300: 2,100 calls vs. 20,300 puts. The net result is $58 million favoring the protective put (bear) instruments.
Between $3,300 and $3,500: The net result is balanced between bears and bulls.
Between $3,500 and $3,700: 17,600 calls vs. 2,300 puts. The net result is $55 million favoring the call (bull) options.
Above $3,700: 17,600 calls vs. 2,300 puts. The net result favors the call (bull) options by $85 million.

This raw estimate considers call (buy) options being exclusively used in bullish strategies and put (sell) options in neutral-to-bearish trades. However, investors might have used more complex strategies, typically involving different expiry dates.

Minimal volatility is expected for this week

Buyers and sellers will face small gains from moving Ether price to boost their returns on Friday's weekly options expiry. The dispute for the $3,500 might be interesting, but it could go either way.

To put things in perspective, the ETH monthly options expiry on Sept. 24 currently holds a $1.6 billion open interest. Thus, both sides are likely concentrating efforts for the next week.

Ether Options

Bulls placed their bets at $2,100 and higher

Bears aim for a $325 million profit

Bulls should throw the towel and focus on the June expiry

Ether futures show modest sentiment improvement

Options traders fear ETH could drop lower

Data suggests bulls are set for a significative loss

Bears will try to hold ETH below $2,400

Pro traders are neutral despite the price weakness

Bullish calls dominate Friday's ETH options expiry

Bears need sub-$4,200 ETH to balance the scales

Both sides have incentives to move price

Bulls were too optimistic, but they're still ahead

Bulls have a few reasons to keep Ether price above $4,200

Bears need a 7% price correction to reduce their losses

Bears were not expecting prices above $3,300

Bulls are comfortable at $3,600

Bears need sub-$3,500 to balance the scales

The call-to-put ratio reflects a balanced situation

Minimal volatility is expected for this week

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