Recent events in the cryptocurrency market indicate forceful bullish sentiment among Ethereum traders, especially in the options market.
Amid rising expectations for the potential approval of spot Ethereum ETFs, there has been a noticeable shift in option pricing, with Ethereum call options becoming more pricey than put options across all expirations.
This price pattern suggests that the market is positive about Ethereum’s price prospects. Specifically, a call option gives the holder the right, but not the obligation, to purchase an asset at a specified price within a specified time frame.
This type of option is usually purchased by traders who believe that the price of the asset will escalate. Conversely, a put option gives the holder the right to sell an asset at a predetermined price and is often used as a hedge against a decline in the asset’s price.
Market indicators point to Ethereum’s bullishness
Luuk Strijers, CEO of Deribit, highlighted this trend in its communications with The Block. He noted that “the put minus call bias is negative at all expirations and increases further after the late June expiration, which is quite a bullish signal.”
In addition, the basis, or the annual premium of the futures price over the spot price, has increased to approximately 14%, further strengthening the bullish outlook.
The analysis shows that investors prefer to buy call options at a premium compared to put options, especially those that expire in overdue June and later.
This pattern is a sign of a bullish market, indicating that investors are not as interested in providing protection against potential price declines as they are in expecting Ethereum’s value to continue to rise.
Meanwhile, after the U.S. Securities and Exchange Commission (SEC) unexpectedly requested changes to the documents, there has been renewed optimism about the possible approval of spot Ethereum ETFs.
This optimism translated into significant market activity, with Deribit seeing almost unprecedented trading volumes. Strijers noted: “We have seen an almost unprecedented $12.5 billion notional trading volume in the last 24 hours.”
This escalate in trading volume and market interest reflects the positioning of traders and investors to capitalize on the potential approval of instant Ethereum ETFs.
According to data with Deribit, over 480,000 connections with a nominal value of over $1.7 billion will expire by the end of this month.
The data further shows that the strike price is as high as $7,000 and the total intrinsic value is $1.452 billion, indicating that many Ethereum options traders are very bullish on ETH.
ETH price results and forecast
Meanwhile, Ethereum is undergoing a slight correction, down 2.4% in the last 24 hours, with a trading price of $3,690. Despite this pullback, the asset has maintained a forceful uptrend, rising almost 25% over the last seven days.
As market expectations for spot ETH ETFs grow, a prominent cryptocurrency analyst has taken notice he suggested Ethereum’s potential price movement, pointing to a brief decline around $4,000 before surging to novel all-time highs.
According to the analyst, while there may be some bumps, hitting a record high of $5,000 seems “inevitable” for Ethereum.
$ETH: I think we will briefly pull back around 4k, but it will certainly break all historical highs if/when the ETF is approved. This still seems like a free trade for ETH heading towards ATH which is priced at 5k. There may be some bumps along the way, but that 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
