Bears overwhelm bulls as ETH options expire today

ETH price has rebounded 13% from $ 2,950 its January 9 low, but it seems too early to speak of a cycle low. Instead, the larger downward move has prevailed, and although it appears to be primarily related to Bitcoin price movements, the Fed’s stricter regulatory and policy issues are believed to be the cause.

Bitcoin and ether have been under pressure since regulators turned their attention to stablecoins. On November 1, the US Treasury Department asked Congress to ensure that stablecoins issuers are regulated in a manner similar to banks.

 USD daily frame price chart | Source: TradingView

Currently, the descending channel that has been forming since mid-November is showing resistance for ether at $ 3,850. The average transaction fee on the network has also risen back above $ 50, and the longer the Ethereum 2.0 upgrade expires, the more advantages competing chains have.

Regardless of the reason ETH was down 28% over the past six weeks, the bulls missed the chance to make a profit of $ 300 million on the weekly expiration of the options today (Jan 14). Unfortunately for the bulls, the $ 4,500 scenario does not seem sustainable right now.

Ether Options Open Interest Summary for January 14th | Source: Coinglass

The call-to-put ratio shows that the bulls are 89% dominant as the $ 380 million call options have a larger open interest (OI) than the $ 200 million put options. The current call-to-put ratio of 1.89 is wrong, however, as the recent drop in ether left most bullish bets worthless.

If the price of Ether stays below $ 3,300 this afternoon at 3:00 p.m. GMT, there will be only $ 24 million in call options, but there will be no value in buying Ether for $ 3,300. la if it trades below that price.

Bears have to pin the ETH price below $ 3,300

Here are the three most likely scenarios based on the current price trend. The number of options contracts available today for calls and puts depends on the price of ether at expiry. An imbalance in favor of both represents a theoretical gain:

• From $ 3,100 to $ 3,300: 7,400 buy orders vs. 27,800 sell orders. $ 65 million net income in favor of put (bears)
• From $ 3,300 to $ 3,500: 22,200 buy orders vs. 19,300 sell orders. The net result is a balance between the bulls and the bears.
• Over $ 3,500: 32,500 buy orders vs. 15,600 sell orders. The net result is $ 60 million in favor of the call (bull).

This rough estimate looks at calls used in bullish bets and places neutral to bearish trades. However, this simplification does not imply any more complex investment strategies.

The cops don’t stand a chance

Ether bulls will have an advantage of over $ 300 million if the price is held above $ 4,500. However, this scenario is unsustainable and now the bulls will have to raise the price 6% from $ 3,300 to $ 3,500 for a profit of $ 60 million.

With less than 6 hours to expire in ETH options this week, the bulls will likely focus their efforts on keeping ether above $ 3,300 to balance the scales.

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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