The past two weeks have been nothing short of a roller coaster for Ether (ETH), which has hovered between $ 2,000 and a record high of $ 2,650. The 20% crash of April 17 caused a $ 1 billion sell-off on long-term futures and also significantly reduced investor risk appetite.
However, as noted above, the 28% gain over the past two days has taken open interest on Ether futures to $ 8.2 billion, just 5% below its all-time high. April 15. A similar event has taken place in the options markets, which have risen 45% since the March 25 expiration.
The recent price rally has been attributed to the CEO of Paypal, claiming that the demand for cryptocurrencies has been several times higher than expected. Moreover, the net worth stuck in Ethereum smart contracts hit a record high of $ 54.2 billion, under the leadership of Uniswap, Compound and Maker.
The 154% increase in this metric came as network fees remained at levels above $ 8 per transaction, making it easier to speculate on predatory competition. Meanwhile, Binance Smart Chain has reached TVL $ 17 billion, and the growth in Decentralized Finance (DeFi) appears to be more than enough to support both.
Open interest has skyrocketed, but 22% of it is about to mature
While the current open interest of $ 4.2 billion on Ether options is a record high, $ 930 million is expected to expire on April 30. As usual, the Deribit exchange reigns supreme with a 90% market share.
It should be noted that not all options will trade on expiration as some of these strikes now seem unreasonable, especially with less than three days left.
Options are divided into two segments, as call options allow the buyer to acquire Ether at a fixed price on the expiration date. These are often used on neutral arbitrage trades or bullish strategies.
Meanwhile, put options are the preferred hedging instrument to protect against negative price fluctuations.
To understand how these competing forces are balanced, it is worth comparing the size of the calls and puts at each expiration (exercise) price.
A strange trend emerged when the bears were taken by surprise, with 91% of interest open on puts at $ 2,400 or less. Meanwhile, the bulls were overly bullish, with nearly half of those call options at $ 2,880 and above.
The Bulls have a decent lead of $ 115 million
However, any expiration over $ 2,240 is very favorable for bulls who are currently leading with an open interest of $ 115 million. This difference in favor of call options would double to $ 2,880, although that doesn’t seem to justify a 10% price hike for Ether.
As far as bears go, this game seems totally lost as only a miracle 17% drop below $ 2240 would be enough to eliminate the call option advantage.
At the moment, there is little reason to believe that the April 30 options expiration will bring any surprise to the price of Ether. Deribit and OKEx both set at 8:00 UTC, and traders will likely focus on June options.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of UKTN. Every investment and trading move involves risk. You need to do your own research when making a decision.