The Ether (ETH), price was within 2% of its historic high. On Dec. 2, the altcoin achieved its highest Bitcoin (BTC), terms price since May 2018. The Ether price of 0.0835 in the BTC pair is a 229% increase for 2021. However, Ether bulls may come out empty-handed after Friday’s expiry of $680 million options.
ETH/BTC Price at FTX. Source: TradingView
The ascending channel formation, which was initiated in October, likely reflects Ether’s $177 billion in smart contracts (TVL) total value. Ether’s ETH2.0 beacon chain balance hit an 8.45million high in November, which represents a 4.5% rise.
According to Cointelegraph, last week four Ethereum blockchain-based metaverses projects generated more than $100,000,000 worth of virtual land in NFT sales.
Ether investors may be worried about the meeting of the United States Lower House scheduled for December 8, where the committee will concentrate on “Digital Assets and the Future of Finance”. The meeting is expected to take place in Washington D.C. 8.
Regardless of the reason behind ETH’s current 6% price drop, bulls missed an opportunity to make $80 profit in Dec. 3, weekly options expiry.
For Dec. 3, open interest in Ether options is a total of $3.3 billion Source: Coinglass.com
The call-to-put ratio gives bears a 19% advantage. The $375 million put (sell), instruments have a higher open interest than the $305 million call option (buy). Because of the 49% bull market since September, most bearish bets have become worthless, the 0.81 indicator can be misleading.
If Ether’s price is above $4,400 at the 8:00 AM UTC Dec. 3, then only $68,000,000 worth of put (sell) options would be available. If Ether is trading at above $4,400, the right to sell Ether is worthless.
After today’s 4% drop in price, bulls remain unfazed
Based on current price action, the following are the most likely scenarios. The expiry ETH price will determine the number of options contracts that are available for bulls (call) or bears (put) instruments on Dec.3. The theoretical profit is the result of an imbalance in favor of each side.
Between $4,300 to $4,500: 11,300 calls against 15,400 puts. The net result is balanced. Between $4,500 & $4,700: 21,700 call vs. 7,300 put. The net result favors the call (bull), instruments by $65 million. Above $4,700: 26,000 calls against 5,000 puts. The net result favors the call (bull), instruments by $100 million.
This rough estimate includes call options used in bullish bets, and put options only in neutral-to bearish trades. This oversimplification ignores complex investment strategies.
A trader might have sold a call option and thus gained negative Ether exposure above a certain price. Unfortunately, it’s not possible to accurately estimate the effect.
Bulls need $4,700 to secure a decent-sized profit
To make a $100 million profit, Ether bulls must achieve a 4.7% increase in price from $4,500- $4,700. To avoid losses, bears must keep Ether prices below $4,500.
The ETH/BTC chart shows that there is some decoupling taking place, which could be beneficial for Ether holders. This favorable outcome for bulls is not likely despite the incentive to push Ether price higher than $4,700 before Friday’s expiry.
Could bears be able to save this week’s options and avoid a loss of $100 million? Possibly.
Risk is inherent in every investment or trading move. Before making any investment or trading move, you should do your research.