Ether (ETH) has been unable to take care of price above $3,400 over the past 40 days, raising concerns amongst traders that bears may remain on top of things for longer.
Key Takeaways:
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$6 billion value of Ether options expire on Friday, with call bets (buy) outperforming put instruments (sell) by 2.2x.
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The bears have the advantage unless ETH price breaks $3,100.
Friday's $6 billion ETH options expiry could add further pressure as bulls had expected year-end prices of $4,000 or more before November's 28 percent plunge.
Ether price at 8:00 a.m. UTC on Friday will determine whether bears remain on top of things despite call options outperforming put instruments by an element of two.2.
Aggregated open interest for ETH call options on Friday, USD. Source: laevitas.ch
Deribit accounts for 70% of total open interest, followed by Chicago-based CME at 20%. However, a lot of the $4.1 billion value of call options will expire worthless on Friday as traders focused on bullish bets on year-end Ether prices between $3,500 and $5,000.
Less than 15% of total call options were positioned at $3,000 or less.
Even excluding overly optimistic purchase prices of $5,000 and above, which likely incurred limited costs to buyers, the info shows that lower than 25% of those instruments were placed below $3,200.
Traders often sell covered calls at year-end strike prices of $8,000 and $10,000 without realistic expectations of reaching these levels.
While bulls were overconfident that Ether would reclaim $3,400 by year-end, bearish strategies may additionally have gone too far by concentrating bets between $2,200 and $2,900.
If Ether trades above $2,950 on Friday, greater than 60% of the entire $1.9 billion in put options will expire worthless. Nevertheless, bearish positions remain higher placed so long as ETH stays below $3,200.
Aggregated open interest of ETH put options on Friday, USD. Source: laevitas.ch
Investors reacted to reports Thursday that Intel had failed in its push to make advanced chips within the United States because it tried to challenge global leader Taiwan Semiconductor (TSMC US).
According to Bloomberg, Nvidia (NVDA US) has stopped production testing that relied on Intel's manufacturing processes.
ETH options traders see increased risk
As traders priced in weaker prospects for the economic impact of artificial intelligence within the US, many moved to hedge their ETH positions.
Top 48-hour ETH options strategies at Deribit, USD. Source: Laevitas.ch
Demand for bearish ETH options strategies increased, including “Bear Diagonal Put Spread,” “Bear Put Spread,” and “Bear Call Spread,” especially after multiple failed attempts to recapture the $3,400 mark over the past five weeks.
$3,100 is vital for Ether bulls
Below are 4 likely scenarios for year-end ETH total options expiration based on current price motion:
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$2,700 to $2,900: The net result favors put instruments by $580 million.
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$2,901 to $3,000: The net result favors put instruments by $440 million.
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$3,101 to $3,200: Balanced result between call and put options.
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$3,201 to $3,300: The net result favors the decision instruments by $150 million.
A break below $2,900 on Friday could further weaken Ether investor sentiment. However, Ether bulls still have a chance to push prices towards $3,100 on Friday, which might help balance positioning and distance Ether price from December lows of $2,775.
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