Ether (ETH) started a rally on April 25, which resulted in a 90% gain that pushed the price down to $ 4,200. The non-stop action was driven by an incredible increase in the uses of decentralized financing (DeFi) where the blocked net value exceeded the value $ 74 billion, up 51% in eighteen days.
This positive momentum has decimated the put options from neutral to bearish and given the bulls an even greater incentive to continue the rally. May 14th $ 730 million total ether options are expected to expire and the cops are in full control. since the purchase options (call) represent the majority of the contracts.
On May 9th there was also Record decentralized exchange (DEX) trading volume of more than $ 5 billion. This roughly corresponds to the average daily volume of Coinbase and an increase of 150% from the previous month.
At first glance, the data favor the bears
Regardless of the reasons for the rally of Ether, the weekly expiration of options gained relevance with increasing open interest. This data means traders shouldn’t ignore the significance of the 176,000 Ether options contracts that expire on May 14th.
Stay open On Friday, 76,700 call option contracts with a current value of USD 228 million are due. The buyer of a call option can purchase Ether on a specified future date at a fixed price. Because of this, this instrument is used more often in neutral or bullish strategies.
On the other hand, put options offer buyers the opportunity to protect themselves from negative price fluctuations. They are therefore necessary for bearish-neutral strategies and currently add up 99,000 contracts as of May 14th, USD 371 million open interest.
If you dig a little deeper, the result will be different
These numbers initially reflect a bearish scenario, as evidenced by the 0.77 buy-to-sell ratio. However, the right to sell Ether for $ 3,200 on Friday isn’t very useful as these options trade below $ 12.
The recent upward trend has caused 85% of put options are under water as there are only 16,000 ether contracts with a strike of $ 3,700 and more.
Those open positions of $ 60 million seem irrelevant compared to 45,000 call options which indicate $ 3,800. These are currently worth $ 169 million, giving the bulls a net advantage of $ 109 million.
Bears have little to gain by lowering the price
If the bears somehow managed to push the price below $ 3,500 on Friday at 8:00 a.m. UTC, it would reduce their disadvantage by $ 86 million. Therefore, they have incentives to suppress the price at least until the end of Friday.
For a longer-term perspective, provided there is no pressure from the supervisory authorities in the USA, The path to $ 5,000 per ether remains a clear target for the bulls.
Investors and market makers are currently watching SEC chairman Gary Gensler, although no deadline has been set despite recent statements to Congress.
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