ETH bulls and bears are fighting for $ 4,000 next week

For the past 40 days, Ether has been on a modest upward trend, following a narrow channel for most of the time. It saw a brief rally to $ 4,000 in the first week of September, but a subsequent decline sent the price on an upward channel.

Ether price chart | Source: TradingView

NFT recorded record transactions in August, which clogged the Ethereum network and caused the average transaction fee to exceed $ 40 in early September. Although NFT transaction volume is currently showing signs of declining, new digital works continue to be minted every minute, regardless whether they are tradable or not.

On September 13, Cathie Wood, CEO of Ark Invest, a US $ 58 billion asset manager, announced that they intend to allocate 60% Bitcoin and 40% Ether. Ark Invest holds shares in Coinbase (COIN) and Grayscale Bitcoin Trust (GBTC). Additionally, Wood has been a long-time Bitcoin supporter.

Ether investors may have been lucky as Solana (SOL), one of its biggest competitors, faced a 7-hour outage on September 15th.

Another incident happened the same day, Ethereum Layer-2 rollup, Arbitrum One went offline for 45 minutes. The team attributed the downtime to a large number of transactions being sent to the arbitrum processor in a short period of time.

September 3 Ether Option Open Interest Summary | Source: Bybt.com

These events show the importance of the ETH 2.0 upgrade, which will bring parallelism and significantly reduce transaction fees. Oddly enough, Ethereum was also exposed to an attack when a malicious entity posted a long block (~ 550) with invalid Pow. However, the majority of network clients reject the attack, so it is unsuccessful.

As shown above, the bears were taken by surprise when 95% of the put options were placed at $ 3,500 or below. Therefore, if Ether stays above this price today (September 17), only $ 8 million in neutral to bearish put options will be activated on expiry.

A put option is the right to sell ether on the expiration date at a predetermined price. Therefore, a put with an exercise price of $ 3,000 becomes worthless if Ether stays above that price at 3:00 p.m. local time.

Call-to-put ratio reflects an equilibrium situation

The call-to-put ratio is currently at 0.95, which is the small difference between a call of $ 173 million and a put of $ 181 million. This suggests that more detailed analysis is needed to see that some bets are unlikely given the current $ 3,500 price.

For example, if the price of Ether was $ 3,300 during today’s option expiration, all call options above that price would be worthless.

Here are the four most likely scenarios considering the current price of Ether. The imbalance in favor of one of the parties represents a theoretical gain from the time of forfeiture.

• From $ 3,100 to $ 3,300: 2,100 buy orders vs. 20,300 sell orders. The net result is $ 58 million in favor of put options (bears).
• From $ 3,300 to $ 3,500, the net result is a balance between the bears and the bulls.
• From $ 3,500 to $ 3,700: 17,600 buy orders vs. 2,300 sell orders. The net result is $ 55 million in favor of the call (bull).
• Over $ 3,700: 17,600 buy orders vs. 2,300 sell orders. The net result is that the bulls completely dominate with an open interest of $ 85 million.

This rough estimate assumes that calls are only used in bullish strategies and put options are placed in neutral to bearish trades. However, investors may have used more complex strategies that often involve different expiration dates.

Ether price is expected to show little volatility this week

Buyers and sellers will try to increase their profits as options expire weekly, regardless of whether the ETH price hits $ 3,500 or not.

Meanwhile, the monthly ether options, which expire on September 24, currently hold $ 1.6 billion in open interest. So both sides concentrate all their energies on the next week.

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According to Cointelegraph

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