Ether's Value Surges Amid Heightened ETF Approval Odds and Rising Interest in Options Expiry
Summary:
Ether's value surged over 18% as the likelihood of an Ethereum exchange-traded fund (ETF) approval increased from 25% to 75% due to political pressures on the US Securities and Exchange Commission (SEC). Increased interest in weekly and monthly Ether options expiries is observed, with open interest hitting $3.22 billion by the end of May. Ether's price above $3,600 could be positive for bullish strategies, indicating further potential rise after the expiry.
Ether's value experienced an increase of over 18% on May 20, following an upgrades in the probability of an Ethereum exchange-traded fund (ETF) being approved by Eric Balchunas, a top Bloomberg analyst. He pushed the likelihood up from 25% to 75% due to evident political pressures on the United States Securities and Exchange Commission (SEC), forcing them to engage more with ETF proposals.
Balchunas also mentioned how the SEC has allegedly requested exchanges like Nasdaq and NYSE to revise their filings, despite there being no formal acknowledgement from the regulatory body. Meanwhile, the co-founder of the ETF Institute and ETF Store president, Nate Geraci, noted that the final verdict is yet to be given on the registration requirements for individual funds, known as S-1s.
Geraci believes that the successive approval of the changes to the exchange rules and the S-1 fund registration may be required to meet the May 23 deadline for the Ethereum spot ETF request by VanEck. The regulator might need additional time to examine and approve these documents due to the complexities and potential risks involved with Proof-of-Stake (PoS) cryptocurrency-related structures.
The impending decision regarding the Ethereum spot ETF has captivated increased interest in weekly and monthly Ether options expiries. Deribit, a top derivatives exchange, has recorded an open interest of $867 million for Ether on May 24 and a notable $3.22 billion by May 31. For monthly Ether options, CME only shows an open interest of $259 million, with OKX reporting $229 million.
On Deribit, the call-to-put ratio exhibits more purchases of call options, suggesting that traders have been extremely active in buying rather than selling.
If Ether manages to uphold a price above $3,600 by 8:00 a.m. UTC on May 24, only $440k worth of sell instruments will be pertinent to the expiry. The right to sell Ether will be insignificant if it trades above this price point, whereas the right to buy Ether up to this price will be exercised, rendering a potential $397 million open interest favouring call options.
Conversely, the stakes grow bigger for the monthly Ether expiry due on May 31, as 97% of the put options will be unessential if the price of Ether exceeds $3,600.
Ether's price rally over $3,600 has been advantageous for bullish strategies. However, with the unpredictability of the final Ether price outcome by May 31, the open interest will remain favoured by the call options, driving a net difference of $1.44 billion in favour.
Traders may be engaging in more complex strategies like selling put options to gain positive Ether exposure or selling call options to profit from price drops. Estimating this effect is difficult, but Ether's unexpected 18% surge has startled option traders, leading to significant gains for bullish strategies. This implies that Ether's price is likely to rise further after the expiry. Please note, this is not an official investment advice and risks are involved, so make sure to conduct an independent analysis when proceeding.
Published At
5/21/2024 2:50:38 AM
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