Recent developments in the cryptocurrency market indicate a strong bullish sentiment among Ethereum traders, especially in the options market.
Amid growing anticipation for potential approvals of spot exchange-traded funds (ETFs), there has been a notable shift in options pricing, with Ethereum call options becoming more expensive than put options at all expirations.
This pricing pattern indicates that the market is optimistic about Ethereum's price prospects. Notably, a call option gives its holder the right, but not the obligation, to purchase an asset at a specified price within a specified time frame.
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This type of option is usually purchased by traders who believe that the price of the asset will rise. Conversely, a put option provides its holder with the right to sell the asset at a predetermined price and is often used as protection against a decline in the price of the asset.
Market indicators indicate an upward trend for Ethereum
Luke Striegers, CEO of Deribit, Highlight This trend continues with The Block. “The minus put skew is negative across all expirations and increases further after the end-June expiration, which is quite a bullish signal,” he noted.
In addition, the basis, or annual premium of the futures price over the spot price, has risen to about 14%, reinforcing the bullish outlook.
The analysis reveals that traders prefer to buy call options at a premium compared to put options, especially for those expiring at the end of June onwards.
This pattern is a sign of a bull market, indicating that traders are not as interested in securing protection against potential price declines as they are in anticipating that Ethereum's value will continue to rise.
Meanwhile, after the US Securities and Exchange Commission (SEC) unexpectedly required changes to deposit operations, there was renewed optimism about the potential approval of Ethereum ETFs.
This optimism translated into significant market activity, with Deribit seeing almost unprecedented trading volumes. “We recorded an almost unprecedented trading volume of US$12.5 billion over the past 24 hours,” Striggers commented.
This surge in trading volume and interest in the market reflects how traders and investors are positioning themselves to benefit from the potential approval of Ethereum ETFs.
according to Data From Deribit, calls worth more than $480,000 will expire by the end of this month, with a notional value of more than $1.7 billion.
The data also reveals that the strike price reaches $7,000, with a total intrinsic value of $1.452 billion, indicating that many Ethereum options traders are very bullish on Ethereum.
ETH price performance and forecast
Meanwhile, Ethereum is seeing a slight rebound, down 2.4% over the past 24 hours, with a trading price of $3,690. Despite this pullback, the asset has maintained a strong uptrend, rising nearly 25% over the past seven days.
As market speculation grows around spot ETH ETFs, one prominent cryptocurrency analyst has done just that Proposal Potential price action for Ethereum, suggesting a brief pullback at around $4,000 before a rally to all-time highs.
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According to the analyst, although there may be some hurdles, reaching the all-time high of $5,000 seems “inevitable” for Ethereum.
$ Ethereum:I think we pull back briefly around 4K but this definitely breaks all-time highs if/when the ETF is approved. This still looks like a free trade of ETH going to ATH, which is priced at 5k. There can be some bumps along the way but it seems inevitable.
I have both SOL and ETH and no… pic.twitter.com/IznlJ0RAyl
— Altcoin Sherpa (@AltcoinSherpa) May 22, 2024
Featured image created with DALL·E, chart from TradingView
