Cryptocurrency aficionados, especially Ethereum traders, are pulsating with bullish optimism these days. Their unwavering sentiment is bolstered by evolving trends in the volatile crypto market, specifically in the options segment, as traders prepare with bated breath for the potential approvals of spot Ethereum exchange-traded funds (ETFs).
Most discernible in the recent trends is the subtle yet marked pricing shift in Ethereum call options, now more expensive than put options across every expiry date. In layman’s terms, the elevated prices of the call options indicate a flourishing market optimism about Ethereum’s future pricing prospects.
To understand this industry jargon, a call option offers the contract holder the choice, but not a mandate, to purchase an asset at a pre-determined price within a stipulated time frame. Traditionally, a call option is the favored choice of traders who forecast a rise in the asset’s price. On the other hand, a put option furnishes the right to sell an asset at a pre-set price, usually employed as a safety net against a possible dip in the asset’s price.
Luk Strijers, the chief executive officer of Deribit, savvy in the workings of the market, flagged this trend in a conversation with The Block. The current scenario, where the “put minus call skew is negative across all expiries and rising further beyond the end of June”, is a tell-tale sign of strong optimism.
Adding weight to this bullish inclination is the increasing ‘basis’, essentially the annualized premium of the futures price over the spot price, currently hovering around a solid 14%.
The distinct preference for call options is evident, especially those set to expire at the end of June or later. The prevalent sentiment among traders is to anticipate a further price hike for Ethereum rather than guarding against potential dips.
This rising optimism, sparked largely by a request for filing modifications from the US Securities and Exchange Commission (SEC), has triggered renewed hope for approvals of spot Ethereum ETFs. This has stirred the market, with Deribit experiencing an overwhelming surge in trade volumes. As Strijers put it, “We recorded an almost unprecedented trading volume of $12.5 billion notional over the last 24 hours.” Indeed a testimony to the traders’ attempts to leverage the potential approval of spot Ethereum ETFs.
Data from Deribit reveals that over $480,000 calls will expire by end of this month, valued notionally at over $1.7 billion. Strikingly, the strike price reaches an impressive $7,000 with a total intrinsic value of $1.452 billion, a clear indication of the bullish sentiment amongst Ethereum option traders.
Presently, Ethereum is facing a slight drawback, with a 2.4% dip in trading price recently clocking in at $3,690. Regardless, the tenacious cryptocurrency maintains an admirable uptrend, boasting a neat 25% rise in the past week.
A seasoned crypto analyst weighs in on the current atmosphere, hinting at a possible brief dip at around $4,000 before Ethereum catapults to new, unprecedented highs. Despite potential hoodwinks along the way, breaking the $5,000 all-time high ceiling seems “inevitable” for the resilient Ethereum.
