Over the last several days, Ethereum has made a lot of investors pleased. In fact, the second-generation coin has been in the green for the past eight days, notwithstanding a slight red close yesterday. A large number of investors are currently hedging for and against Ethereum. With the price of bitcoin currently trading at $2312.23 at press time, much of their hedging may be coming to an end as well.
If you’re wondering how it would affect ETH, these measurements will help you figure it out.
Optional Ethereum – Is it a wise choice?
According to the most recent increase in ETH Options’ Open Interest (OI), this appears to be the case. As the price has risen over the last eight days, so has OI. At the time of writing, the OI had risen by $800 million to $2.8 billion.
This was a 27 percent increase, which was also the largest in over a month. The OI’s continuous rise, on the other hand, did not correspond to the Options Volumes, which were strictly reasonable. While there was a rise on July 26, these volumes have largely stayed inactive.
However, the Ethereum Options OI by Strike makes an intriguing discovery. Simply said, this indicator represents the number of hedge contracts that have been placed at various prices.
Puts indicate a drop to that price, whilst Calls indicate a rise to that price. If you look at the chart, you’ll observe that the market is highly optimistic about a price increase. Throughout the $2200–$4000 range, Calls contracts have dominated Puts contracts. In addition, about 230k contracts in the $5000 – $15000 category were placed. These aren’t insignificant figures.
The biggest number of hedged contracts – 68k – are in the $5000 range, with over 90% of them being Calls. This demonstrates how optimistic investors are about Ethereum. When you consider the expiration dates of these contracts, the possibility of a price increase becomes more realistic.
Contracts for ETH Options are about to expire.
When it comes to analyzing price movement, the expiry is a crucial indication. Prices can be estimated depending on when the contracts are placed and the dominant kind – Puts or Calls. This could be a good thing for Ethereum. The majority of OIs will expire between September and December 2021.
Investor sentiment is reflected in this year-end hedge, as people anticipate a significant price differential by the end of the year. Probably a price increase, as the range of most Options contracts is bullish, and the rally is already underway.
Furthermore, approximately 325k contracts are set to expire tomorrow. As a result, it will be interesting to watch if last week’s bounce resulted in profits or losses for investors, as a slew of Puts orders for Ethereum dropping to the $1000 – $1800 region were placed.