Derivatives data shows bears have sufficient incentives to keep ETH price below $3,000 heading into the $340 million options expiry on Oct. 1. Ether (ETH) price has seen quite a bit of volatility lately and to the surprise of many traders, the $4,000 level continues to present considerable resistance. Currently, the price is respecting the upward channel, which started in August. But every time the support is tested, the risk of an aggressive correction increases. With that in mind, the $340 million options expiry on Oct. 1 will likely be dominated by neutral-to-bearish put options.
Bulls placed larger bets for the expiry but it appears that they were too optimistic for Oct. 1, so their $215 million call (buy) options are getting closer with the looming approach of the expiry date. It’s possible that Ether could be a victim of its own success because the demand for decentralized finance (DeFi) applications and the minting of nonfungible tokens (NFTs) continue to clog the network. This has caused the average gas fee to surpass $20 over the past ten days.
Notice above how OpenSea, the largest NFT marketplace, represents over 20% of the entire Ethereum network’s gas use in the past 24 hours. When analyzing the incredible demand for blockchain transactions, Polygon's co-founder, Sandeep Nailwal, says it is a matter of time before Ethereum overtakes Bitcoin as the dominant layer-1 protocol.
However, negative news continues to emerge as the fourth-largest Ethereum mining pool will shut down operations in China, citing "regulatory policies." Furthermore, SparkPool, the second-largest Ether mining pool, will also cease operations this month. As for the $340 million options expiry on Oct. 1, bulls need to push the price above $3,000 to avoid significant bearish pressure.
As noted above, bulls were caught by surprise because the call (buy) instruments were placed at $2,900 or higher. Consequently, if Ether remains below that price on Sept. 17, only $1.4 million worth of neutral-to-bullish call options will be activated on the expiry. his means that a $3,000 put option becomes worthless if Ether remains below that price at 8:00 am UTC on Oct. 1.
The 1.74 call-to-put ratio represents the slight difference between the $215 million worth of call (buy) options versus the $125 million put (sell) options. Although favoring bulls, this broader view needs a more detailed analysis because some of those bets are implausible considering the current $2,800 price. Below are the four most likely scenarios for Ether price. The imbalance favoring either side represents the theoretical profit from the expiry.
Depending on the expiry price, the quantity of calls (buy) and puts (sell) contracts becoming active varies:
This raw estimate considers call options being exclusively used in bullish strategies and put options in neutral-to-bearish trades. However, investors might have used more complex strategies that typically involve different expiry dates.
Bears have absolute control of Oct. 1's expiry and they have sufficient incentive to keep pressuring the price below $2,800. However, one must consider that during negative price trends, like now for Ether, a seller might cause a 2% negative move by placing large offers and making aggressive sales.
On the other hand, bulls need a 7% positive price swing taking Ether above $3,000 to balance the options expiry on Oct. 1. It is impossible to calculate how much a trader needs to spend to drive the market that way, although it seems a colossal task.
If no surprises come before Oct. 1, Ether's price should keep trading below $2,800.
|#||Crypto||Prediction||Accuracy||CVIX||Price||24h||7d||Market Cap||7d price change|
|1||BTC||Bitcoin predictions||56.8%||88||$16 204.64||-2.14%||0.42%||$311 432 382 083|
|2||ETH||Ethereum predictions||60%||85||$1 173.16||-3.68%||3.84%||$143 563 762 696|
|3||USDT||Tether predictions||92.4%||1||$0.999647||0.01%||0.09%||$65 339 620 742|
|4||BNB||Binance Coin predictions||68%||66||$294.91||-5.89%||12.96%||$47 177 552 111|
|5||USDC||USD Coin predictions||95.6%||1||$1.000120||0%||0%||$44 306 171 640|
|6||BUSD||Binance USD predictions||94.8%||1||$1.000244||-0.05%||-0.12%||$22 407 001 633|
|7||XRP||XRP predictions||66%||75||$0.383128||-4.39%||7.55%||$19 270 850 639|
|8||DOGE||Dogecoin predictions||59.6%||90||$0.094582||-2.17%||23.40%||$12 548 267 698|
|9||ADA||Cardano predictions||61.2%||81||$0.305387||-3.59%||-0.43%||$10 515 677 795|
|10||STETH||Lido stETH predictions||92%||1||$2 941.39||-0.40%||-3.32%||$10 258 752 564|
|11||MATIC||Polygon predictions||68.4%||68||$0.820379||-4.13%||1.77%||$7 165 449 645|
|12||DOT||Polkadot predictions||66%||72||$5.15||-4.45%||-2.03%||$5 867 952 400|
|13||DAI||Dai predictions||94.8%||1||$1.000150||0.03%||0.05%||$5 658 820 698|
|14||WTRX||Wrapped TRON predictions||60.8%||79||$0.052628||-1.01%||4.79%||$5 351 021 559|
|15||LTC||Litecoin predictions||66%||70||$71.68||-6.38%||18.26%||$5 139 815 623|
Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.
© 2015-2022 Crypto-Rating.com
The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.