- Ethereum bulls struggle to build momentum to $400 from the confirmed support at $370.
- Deribit becomes the first exchange to offer traders options with strikes of over $1,000 for ETH.
Ethereum is trading marginally below the coveted $400 level. This comes after an impressive recovery from support confirmed at $370 on Wednesday. On the upside, Ether recently traded new yearly highs at $415. However, it has not been a bed of roses because sustaining the price above $400 is currently out of the bulls’ grasp.
In the meantime, Ether is trading at $392 after advancing 1.26% from the opening value at $387. An intraday high has been traded at $394 (temporarily halting the gains towards $400). The prevailing trend is bullish amid expanding volatility. This means that if the technical levels improve, action above $400 would be achievable within the sessions on Thursday.
According to a report by CoinDesk, Deribit, a cryptocurrency derivatives trading platform, has begun listing Ether options with strikes going beyond $1,000. Traders are getting optimistic that the second-largest cryptocurrency will trader highs above $1,000 by the end of 2020.
At least 3,470 contracts (approximately $1.3 million having an ETH $1,120 call option have been entered for both December 2020 and March 2021). Deribit, based in Panama is the first platform to offer traders options for strikes beyond 1,000. The offer commenced on August 1. The COO of Deribit, Luuk Strijers told CoinDesk:
Volumes have been decent and open interest [open positions] is over 2,500 contracts already, indicating some traders believe ETH can potentially show a price move of over 180% in five to seven months.’
Ethereum price action over the last three weeks has had investors and traders sitting on the edge. Moreover, there is a lot of speculation emanating from the DeFi sector that is likely driving interest towards ETH. An option in this case gives the trader the right but not the obligation to buy or sell the underlying asset at the set price and the corresponding date.
As per the data by Skew, a crypto analytics platform, open interest for Ethereum options market has surged massively in 2020 from $14 million to $376 million, representing a growth margin of 2,585%. Most analysts and traders use the options market data to single out support and resistance zones as well as identify the potential price trend. However, according to Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5:
I wouldn’t make much of the existing open interest of 2,500 contracts on these strikes. Almost every strike from $40 to $880 has that as minimum interest… That tells you something about expectations, the ETH options market is not big enough to drive the price of the underlying.