The past few weeks have been nothing short of a roller coaster for Ether (ETH), which hovered between $ 2,000 and a record high of $ 2,650. The 20% crash on April 17 triggered a $ 1 billion liquidation on long-term contracts, and it also drastically reduced investors’ risk appetite.
As shown above, the 28% gain in recent days pushed open interest on Ether futures to $ 8.2 billion, which is only 5% lower than the April 15 record. A similar event took place in the options markets, which have grown by 45% since its expiration date of March 25.
The recent price recovery has been attributed to the Paypal CEO who stated that the demand for cryptocurrencies was many times higher than expected. In addition, the net worth trapped in smart Ethereum contracts hit a record high of $ 54.2 billion, led by Uniswap, Compound and Maker.
The 154% rise in this metric occurred while network fees remained at a level above $ 8 per transaction, easing speculation on predatory competition. Meanwhile, Binance Smart Chain hit a TVL of $ 17 billion, and the decentralized funding (DeFi) growth seems more than enough to support both.
Open interest has skyrocketed, but 22% of it is about to mature
While the current $ 4.2 billion in open Ether options represents a record high, $ 930 million of this will expire on April 30. As usual, the Deribit exchange prevails with a market share of 90%.
It’s worth noting that not every option trades on expiration as some of those strikes now sound unreasonable, especially given that there are less than three days left.
Options are divided into two segments, as the call (buy) options allow the buyer to acquire Ether at a fixed price on the expiration date. These are often used for neutral arbitrage trades or bullish strategies.
Meanwhile, put (sell) options are the preferred hedging tool to gain protection against negative price movements.
To understand how these competing forces balance, one must compare the size of the calls and put options for each expiration price (strike).
A strange pattern emerged when bears were taken by surprise, with 91% of put options open interest at $ 2,400 or below. Meanwhile, the bulls have been overly optimistic, with nearly half of those call options at USD 2,880 and above.
Bulls have a decent $ 115 million lead
However, any maturity date above $ 2,240 is very favorable for the bulls currently leading with interest outstanding of $ 115 million. This difference in favor of call options would double to $ 2,880, although this does not seem to warrant a 10% increase in the Ether price.
As for the bears, this game seems utterly lost as just a 17% miracle below $ 2,240 would be enough to eliminate the call options advantage.
At this point, there is little reason to believe that the options expiration on April 30 will come as a surprise to the Ether price. Both Deribit and OKEx settle at 8:00 AM UTC, and traders’ focus will likely just shift to June options.
The views and opinions expressed here are solely those of the author and do not necessarily reflect Cointelegraph’s opinion. Every investment and trade move carries risks. You should do your own research when making a decision.