Derivative dates favor Ethereum bulls even after this week’s plunge below $ 3,000

The price of Ether (ETH) has been in a downtrend since early September, and this week’s Evergrande-led market crash pushed the price below $ 2,700 on September 20, its lowest level in 47 days. Interestingly, Ether only tested the $ 4,000 psychological barrier three weeks ago, but that changed after heightened concerns about regulating cryptocurrencies and fears that China’s debt markets could trigger a global sale.

This week the chairman of the US Securities and Exchange Commission (SEC) Gary Gensler, spoke to the Washington Post about renewed plans to regulate the cryptocurrency sector and the growing cryptocurrency market..

The negative trend in the price of ether was reversed on September 22nd after the chairman of the US Federal Reserve, Jerome Powell, confirmed the continuation of the monthly bond purchase program of the central bank.. Powell also made it clear that rates are unlikely to rise in 2021.

Price of Ether in Bitstamp in dollars. Source: TradingView
Derivative dates favor Ethereum bulls even after this week’s plunge below $ 3,000
Derivative dates favor Ethereum bulls even after this week’s plunge below $ 3,000

Although the current $ 3,000 level represents a 25% decrease from the recent high of $ 4,000, Ether price still reflects a 215% increase in 2021, and Total Adjusted Net Value (TVL) has increased from $ 13 billion in 2020 to $ 60 billion, suggesting strong adoption despite rising gas prices suggests.

Added open interest of Bitcoin options for September 24th. Source:

As shown above, the bullish momentum was surprised because 72% of the instruments purchased were $ 3,200 or more. Consequently, If the price of Ether stays below this price on Friday, only $ 260 million in call options between neutral and bullish will be activated on expiry.

A call option is a right to sell Bitcoin on the set expiration date at a predetermined price. Handling, A cut option of USD 3,200 will lose its value if Ether stays below that price at 8:00 a.m. UTC on September 24th.

The bullish momentum still has a head start with the $ 1.55 billion maturity on Friday

The 1.48 ratio between call and put options represents the difference between the $ 920 million call options versus the 620 million put options. This bird’s eye view calls for further analysis as some bets are far fetched given the current level of $ 3,000.

Below are the four most likely scenarios taking into account the current Ether price. The imbalance favoring one side or the other represents the theoretical advantage of maturity. The following data shows how many contracts will be activated on Friday based on the ETH price:

  • Between $ 2,700 and $ 2,900: 61,900 calls versus 72,000 puts. Net income is $ 27 million favoring the puts protective instruments (bearish).
  • Between $ 2,900 and $ 3,000: 79,900 call options vs. 52,200 put options. The net result is $ 80 million in favor of call options (bullish).
  • Between $ 3,000 and $ 3,200: 82,500 call options vs. 37,300 put options. The net result is $ 136 million in favor of call options (bullish).
  • Over $ 3,200: 99,600 call options vs. 20,200 put options. The net result favors the call options over $ 255 million.

This gross estimate takes into account that call options are only used in bullish strategies and put options in neutral or bearish trades. However, investors often use more complex strategies that involve different expiration dates. There is also no way of knowing if the referee’s tables are fully covered.

To win, the bearish momentum must keep the price of Ether below $ 2,900.

These two competing forces will show their strength and bearish momentum will try to minimize the damage.. On the flip side, if the price of Ether stays above $ 3,000, the bullish momentum has a good grip on the situation.

The main test will be the $ 2,900 level as the bearish momentum has significant incentives to push the price at that level, even temporarily.. While there is still room for additional volatility ahead of the expiry, the bullish momentum appears better positioned.

The points of view and opinions expressed here are exclusively those of authorTO and do not necessarily reflect the views of Cointelegraph. Every investment and every operation is associated with risks. When making a decision, you need to do your own research.

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