The latest options data for Ethereum indicates that traders are long on the cryptocurrency but it would need more time to reach the $4,000 price level.
Crypto world’s second-largest currency Ethereum had a good run the last 40 days. The currency posted simultaneous gains during some weeks and even rallied close to $4,000 at one point.
However, last week Ether fell by almost 13.87% and returned to its ascending price channel at $3,403. The downswing coincided with an overall decline in the market, triggered by Bitcoin’s pullback to $46,000.
High transaction costs also posed another challenge for the network. Last month, nonfungible tokens saw record-shattering sales that clogged Ethereum, causing average transaction charges to climb up to $40 in early September. While NFT sales have dropped in the last two weeks, new collectibles continue to be circulated on the network.
Predictably, there are concerns around Ethereum’s efficiency and anticipation for ETH 2.0 upgrade, which will help reduce transaction fees on the network. That said, Ethereum’s role in decentralized finance (DeFi) is drawing considerable attention. So much so that Bitcoin advocates like Ark Invest CEO Cathie Wood are increasing their exposure to Ether.
Despite the positive developments, Ethereum is still a long distance from $4,000. Derivatives data reveals that 95% of put instruments have been placed at $3,500 or lower in the upcoming options expiry.
Given Ethereum’s current price, Friday’s options expiry can pan out in four different ways.
If the cryptocurrency plummets to $3,300 or lower, the expiry would lead to $58 million favoring protective put instruments. If the price stays in the $3,300 to $3,500 range, the net result is a balance between call and put options.
Bulls can make considerable gains if they manage to push the price above $3,500, in which case call options would be favored by $55 million. And if they try harder and surpass $3,700, then the result would favor call options by $85 million.
As of press time, Ether has already hit $3,526, which seems favorable for bull instruments. If Ether remains above $3,500 till expiry, it would lead to the activation of $8 million worth of neutral-to-bearish put options.