It looks like Ether (ETH) bulls were thrilled with the recent high of $ 4,870, which was recorded on November 10th. Although this was a new high for the US dollar, the ETH is still 51% below the Bitcoin (BTC) price in June 2017. However, it is possible that the 0.155 BTC level reached in the previous cycle will reflect the overenthusiastic expectations circulating during the first insane coin supply.
The success of the Ethereum network has caused congestion and an increase in fees, which has brought competition closer. For example, in mid-2017, the leading rivals were Ethereum Classic (ETC) and NEM (XEM). Together, they make up only 13% of Ether’s market value of $ 37 billion.
Today, the total value of Binance Coin (BNB) and Solana’s SOL is 32% at $ 557 billion Ether.
Ether is currently trading on an upward channel with a target of $ 5,000, but the Bears still seem to have reason to be skeptical of the network’s ability to deliver Eth2 by the end of the year.
ETH / USD price on Kraken. Source: TradingView
Ethereum’s leading utility case, decentralized finance (DeFi), has caught the attention of regulators this year – and not in the best sense of the word. On November 9, US Securities and Exchange Commissioner Carolyn Crenshaw published her opinion in an article entitled “DeFi Risks, Rules, and Opportunities.” In it, she stated that the sector lacks market protection and expressed concern about aliases and market manipulation.
On the other hand, the value of smart contracts for the Ethereum network reached an all-time high of $ 94 billion, up 42% in three months. So regardless of the competition or the average transaction fee of $ 50, there is undoubtedly a growing demand for DeFi, Non-Fungible Token (NFT), decentralized and decentralized marketplaces.
The adjusted total value of the Ethereum network is locked in USD. Source: DeBank
Interestingly, even with positive Ethereum price action backed by strong use, bearish put options dominate the expiration of $ 700 million ETH options on Friday.
Open interest in Ethereum options will begin on November 12. Source: Bybt
On the surface, $ 415 million is more than $ 415 million with a weekly maturity of 31% compared to $ 285 million in calls (purchases). The 0.69 buy-to-long ratio is lurking as the recent rally is likely to erase most bearish rates.
For example, if the price of Ether stays above $ 4700 at. At 8:00 UTC on November 12, only $ 10 million put (call) will be available after the expiration of put (call) options. The right to sell Ether for $ 4700 has no value if traded above this price.
Bears can still tip the scale below $ 4,600.
Here are the four most likely scenarios based on the current price level. In addition, the data shows the number of contracts that will be available on 12 November for both buy (buy) and bear (sell) instruments.
The imbalance in favor of each side represents the theoretical merit:
Between $ 4500 and $ 4600: 7500 calls against 13600 puts. Net income favors $ 25 million in options.
Between $ 4600 and $ 4700: 12,700 calls at 7,300 pips. The net result is $ 25 million in favor of Buying Instruments (Bull).
Between $ 4700 and $ 4800: 17300 calls for 2100 pips. The net result is $ 75 million in favor of Buying Instruments (Bull).
Over $ 4800: 24300 calls per 100 put The net result is complete dominance when the bulls earn $ 115 million.
This initial estimate takes into account call options used in bullish rates and exclusively put options in neutral and bearish trades. Unfortunately, this simplification overlooks more complex investment strategies.
For example, a trader may sell a put option, effectively gaining negative exposure to ether below a certain price. However, there is no easy way to assess this effect.
Ether may fall, but $ 5,000 will remain a target.
If the price of ether on November 12 had been above $ 4,800, the bulls would have received $ 115 million. As such, for the ETH bears, the $ 25 million loss should be considered a victory.
There’s still a chance the Bears will avoid a loss on November 12 by hitting Ether below $ 4600 on November 12, just 3% below the current price of $ 4750. Is this enough to reject the rising channel that started three weeks ago? Not really, since there is room for $ 4500 without breaking the support level.