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Ethereum bears look to score on Friday’s $340M weekly ETH options expiry

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Ether (ETH) price has seen quite a bit of volatility lately and to the surprise of many traders, the $4,000 level continues to present considerable resistance. Currently, the price is respecting the upward channel, which started in August. But every time the support is tested, the risk of an aggressive correction increases. With that in mind, the $340 million options expiry on Oct. 1 will likely be dominated by neutral-to-bearish put options. 

Ether price at Bitstamp in USD. Source: TradingView

Bulls placed larger bets for the expiry but it appears that they were too optimistic for Oct. 1, so their $215 million call (buy) options are getting closer with the looming approach of the expiry date.

It’s possible that Ether could be a victim of its own success because the demand for decentralized finance (DeFi) applications and the minting of nonfungible tokens (NFTs) continue to clog the network. This has caused the average gas fee to surpass $20 over the past ten days.

Largest gas spenders past 24 hours. Source: etherscan.io

Notice above how OpenSea, the largest NFT marketplace, represents over 20% of the entire Ethereum network’s gas use in the past 24 hours.

When analyzing the incredible demand for blockchain transactions, Polygon’s co-founder, Sandeep Nailwal, says it is a matter of time before Ethereum overtakes Bitcoin as the dominant layer-1 protocol.

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However, negative news continues to emerge as the fourth-largest Ethereum mining pool will shut down operations in China, citing “regulatory policies.” Furthermore, SparkPool, the second-largest Ether mining pool, will also cease operations this month.

As for the $340 million options expiry on Oct. 1, bulls need to push the price above $3,000 to avoid significant bearish pressure.

Ethereum options aggregate open interest for Oct. 1. Source: Bybt.com

As noted above, bulls were caught by surprise because the call (buy) instruments were placed at $2,900 or higher. Consequently, if Ether remains below that price on Sept. 17, only $1.4 million worth of neutral-to-bullish call options will be activated on the expiry.

This means that a $3,000 put option becomes worthless if Ether remains below that price at 8:00 am UTC on Oct. 1.

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Bulls placed more bets, but there’s a catch

The 1.74 call-to-put ratio represents the slight difference between the $215 million worth of call (buy) options versus the $125 million put (sell) options. Although favoring bulls, this broader view needs a more detailed analysis because some of those bets are implausible considering the current $2,800 price.

Below are the four most likely scenarios for Ether price. The imbalance favoring either side represents the theoretical profit from the expiry.

Depending on the expiry price, the quantity of calls (buy) and puts (sell) contracts becoming active varies:

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  • Between $2,400 and $2,500: 0 calls vs. 38,050 puts. The net result is $95 million favoring the protective put (bear) instruments.
  • Between $2,500 and $2,800: 100 calls vs. 22,300 puts. The net result is $60 million favoring the protective put (bear) instruments.
  • Between $2,800 and $3,000: 2,300 calls vs. 13,800 puts. The net result is $33 million favoring the protective put (bear) instruments.
  • Between $3,000 and $3,200: 9,600 calls vs. 6,700 puts. The net result is balanced between bears and bulls.

This raw estimate considers call options being exclusively used in bullish strategies and put options in neutral-to-bearish trades. However, investors might have used more complex strategies that typically involve different expiry dates.

Bulls are wrecked one way or another

Bears have absolute control of Oct. 1’s expiry and they have sufficient incentive to keep pressuring the price below $2,800. However, one must consider that during negative price trends, like now for Ether, a seller might cause a 2% negative move by placing large offers and making aggressive sales.

On the other hand, bulls need a 7% positive price swing taking Ether above $3,000 to balance the options expiry on Oct. 1. It is impossible to calculate how much a trader needs to spend to drive the market that way, although it seems a colossal task.

If no surprises come before Oct. 1, Ether’s price should keep trading below $2,800.

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Ethereum

Crypto Analyst Nicholas Merten Makes Massive Ethereum Prediction for End of Bull Cycle – Here’s His Target

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Prominent crypto analyst Nicholas Merten says that top smart contract platform Ethereum (ETH) may grow another 325% before the current bull cycle comes to an end.

In a new strategy session, the host of DataDash tells his 458,000 YouTube subscribers what he thinks it will take for Ethereum to eventually smash the $20,000 level.

“If everything goes perfect for Ethereum, if we get that opportunity to be able to get ETH to launch properly, people using roll-ups, whether it be zero-knowledge roll-ups or optimistic roll-ups, generally ‘layer-2 solutions,’ we could see a $20,000 Ethereum this cycle. I know it sounds crazy but when you look at the logarithmic chart we’ve seen these kinds of percentage returns before.”

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Rollups are solutions that execute transactions outside the main Ethereum chain, but record transaction data on it. The two types of roll-ups are zero-knowledge (ZK) rollups and optimistic rollups.

The closely followed analyst says that if Ethereum maintains solid fundamentals, a rally to the $20,000 may not be as overly optimistic as it sounds. He notes that such a gain would only be about half of what ETH achieved in the first five months of 2021.

“I think it’s very reasonable we could see this kind of price level. Somewhere between our neutral and optimistic target. To play it safe, I would say that we’ve got a really solid steady stream of price action for Ethereum ahead of us. The key thing to understand is that there are periods of this cycle where Ethereum outpaces Bitcoin, which makes these higher targets reasonable.”

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Ethereum is currently trading for $4,685 at time of writing, up 7% over the last week while Bitcoin has remained almost completely sideways in the same timeframe.

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Ethereum price builds the momentum to hit new all-time highs

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  • Ethereum price develops an entry condition before a test of $5,000.
  • The outperformance of Bitcoin is likely to be sustained.
  • Downside risks remain but are limited.

Ethereum price is up more than 16% for the week, reflecting a resurgence of buying pressure despite the last three weeks of uncertainty. Point and Figure Analysis indicates a bullish entry opportunity is present.

Ethereum price action prepares for another run at $5,000

Ethereum price is positioned to be the primary leader in the cryptocurrency space again. It has broken out above the upper trendline of the bear flag it was trading in, denying any short sellers an opportunity to continue further selling pressure. The $4,800 price level is the final resistance zone that bulls must cross to put Ethereum at new all-time highs.

A double-top at $4,800 currently exists on the $50/3-box reversal Point and Figure chart. That double-top top creates what is likely the final buying opportunity before Ethereum hits its new all-time high. Therefore, the hypothetical long setup is a buy stop order at $4,850, a stop loss at $4,600 and a profit target at $6,250. The projected profit target is derived from the Vertical Profit Target Method in Point and Figure Analysis.

Conservative traders may wish to wait for a pullback from the current double-top and then look for a triple-top to develop. Additionally, conservative traders could wait for a Bear Trap, Bearish Fakeout, or Bearish Shakeout pattern before going long.

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ETH/USDT Daily Ichimoku Chart

However, downside risks remain. Ethereum could very quickly develop a deep retracement towards the $3,300 level despite a breakout above the former bear flag. Hidden bearish divergence is now present on the daily Ichimoku chart, warning traders that the current upswing may be a false move. A daily close that returns Ethereum inside the bear flag would likely trigger a move south and invalidate any bullish entry opportunities on the Point and Figure chart.

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Ethereum-Based Altcoin Erupts 280% in Just Seven Days After Announcing New Gaming Partnership

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An altcoin that specializes in financial services is surging after forging a new partnership with one of the hottest metaverse games.

The price of Request Network’s native token REQ exploded 280% to the upside as news spread that popular virtual world The Sandbox (SAND) had started using Request’s basket of accounting services.

The altcoin rose from $0.20 to $0.76 in a matter of days. At time of writing, REQ is trading for $0.73.

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According to the project’s website,

“Payment experiences should be free from artificial barriers imposed by closed ecosystems. We work together with leading innovators and organizations in the decentralized financial (DeFi) ecosystem to create seamless financial experiences.”

Main features of the Request Network include generating invoices to receive payments in different cryptocurrencies as well as accounting tools for financial management.

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The Sandbox co-founder Sebastien Borget says that only Request Network offered the scope of solutions needed to ensure efficient workflow.

“Payments and accounting are challenging for large companies that deal in crypto. Making manual payments to large numbers of blockchain wallet addresses, and recording the transactions took up precious time and energy from the team each month.

We really needed a way to automate payments to our employees and contractors, and easily account for the company’s crypto transactions and assets during annual financial audits.

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Using Request Finance has helped us slash the time we spent on making crypto payments by 90% every month. That frees up our time and mental resources to focus on building a better platform for our community of creators and gamers.”

Request Network has forged a number of partnerships as well, including with Maker (MKR), Aave (AAVE), Ocean Protocol (OCEAN), and The Graph (GRT).

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