Ethereum has made many investors happy in the past few days. In fact, the second generation coin has been in the green for 8 days yesterday, despite a small red closing price. At the moment, a large number of investors are protecting themselves for and against Ethereum. And with crypto trading at $ 2,312.23 at press time, much of their hedge could also run out.
If you’re wondering how this would affect ETH, these metrics will help you understand how.
Ethereum Options – A Good Option?
Well, based on the recent increase in ETH Options Open Interest (OI), it appears that it does. For the last 8 days as the price went up, so did OI. The OI rose $ 800 million and was $ 2.8 billion at the time of writing.
That was a 27% increase, also the highest such increase in nearly a month. However, the steady growth of the OI did not match the option volumes as the latter were absolutely decent. While an increase was observed on July 26, these volumes were largely dormant.
The interesting observation, however, comes from Strike’s Ethereum Options OI. Put simply, this key figure indicates the number of hedge contracts placed at different prices.
Puts represent a decline to that specific price, while calls are an indicator of such an increase. If you look at the chart you can see that the market is very positive about a price increase. Calls contracts have dominated puts contracts in the $ 2,200 to $ 4,000 range. In addition, over 230,000 contracts ranging from $ 5,000 to $ 15,000 were placed. And these numbers aren’t small either.
$ 5,000 alone has the highest number of hedged contracts – 68,000, with over 90% calls. This is an indication of how optimistic investors are about Ethereum. Even considering the deadlines for these contracts to expire, this potential price hike might seem plausible.
Expiry of the ETH options contracts
The process is an important signal to understand the price movement. Depending on when the contracts are placed and based on the type of dominance – puts or calls – prices can be estimated. As for Ethereum, this can be a blessing. Most OI expirations will be placed between September and December 2021.
This year-end hedge shows investor sentiment as people expect a big price differential by the end of the year. Likely a price increase as the range of most options contracts goes in the bullish direction along with the already active rally.
In addition, over 325,000 contracts expire tomorrow. Hence, it will be interesting to see if last week’s rally brought investors gains or losses as a number of puts orders were placed on Ethereum that fell in the $ 1000-1800 range.