Bulls and Bears Adjust Expectations as Ether Stabilizes, Options Expiry Approaches
Summary:
The recent stabilization of Ether's (ETH) price around $3,500 has lessened the market's expectations of a monthly options expiry above $4,000. Regulatory approval for an Ethereum exchange-traded fund (ETF), initially expected, has yet to come through, affecting bullish attitudes. Currently, it seems unlikely that bullish bets will surpass $4,000 by the June 28 options expiry, despite a total of $3.5 billion in monthly ETH options scheduled to expire. Bearish investors relieved as SEC ends its probe into Ether's alleged security classification. The focus for the bulls remains the $3,800 mark, which could yield a $500 million profit.
The recent stabilization of Ether’s (ETH) price around $3,500 has cooled the market’s expectations of a monthly options expiry going above $4,000. The bullish attitude that was previously boosted by potential regulatory approval for an Ethereum exchange-traded fund (ETF) is no longer as fervent, despite Ether gaining 23% on May 20. Moreover, Ether’s price has consistently fallen short of surpassing $3,600 ever since. As it stands, Deribit, the leading exchange, has slated $3.5 billion in ETH options for termination on 28 June, followed by OKX with $286 million, and then Binance with $142 million. However, it's unlikely that bullish wagers will go beyond $4,000 whilst the SEC continues to peruse the S-1 filings from ETF providers. Although Ether bears didn’t expect the price to rise above $3,000, the gap between potential regulatory approval of the ETF and the proposed trading window (with timelines remaining murky over the next quarter) did take bulls by surprise, making the optimistic predictions for a high-yield June 28 options expiry seem unlikely. At the same time, bearish investors heaved a sigh of relief on June 19, when the SEC confirmed the end of its probe into Ether's alleged security classification, according to a letter sent to Consensys. This ruling releases Consensys from any potential SEC scrutiny regarding Ether sales. As we approach the June 28 options expiry on Deribit, the open interest stands at $3.5 billion. However, expectations point to a lower figure due to assumptions that pricings over $4,000 and under $3,000 are farfetched. The current put-to-call ratio of 0.62 shows a disparity between the $2.2 billion call (buy) options and the $1.3 billion put (sell) options. But if Ether continues to hover around $3,500 by 8:00 am UTC on 28 June, only $257 million in put options will be relevant—making the right to sell Ether at $3,300 or $3,400 insignificant if ETH trades above those figures at expiry. The key focus for the bulls is the $3,800 mark, which could materialize a $500 million profit. The potential wins for each party, based on current trends are as follows: from $3,200 to $3,400, there are 13,000 calls versus 97,200 puts, favoring sell options by $280 million. Between $3,400 and $3,600, the 43,900 calls and 41,600 puts are more or less balanced. And between $3,600 and $3,800, the 104,200 calls versus 24,400 puts favor buy options by $300 million. Lastly, at ranges between $3,800 and $3,900, the 141,600 calls versus 9,600 puts boost call options by $500 million. Simplified, this calculation makes it appear that call options primarily represent bullish wagers and put options lean towards bearish bets. However, it doesn’t take into account intricate trading strategies. It seems unlikely that a spot ETF will get the go-ahead before June 28, so most predictions favor a balanced outcome around $3,500—though this would be a small win for the bears as Ether was trading above $3,800 only a couple of weeks ago. This article is for informational purposes only. All investments and trading moves involve risk, and readers should do their own research when making financial decisions.
Published At
6/20/2024 10:41:00 PM
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