Ethereum
$4,051.96 5.94%
ETH · 3w

Derivatives data favors Ethereum bulls even with this week's crash below $3K

Ether (ETH) has been in a bearish trend since early September, and this week's Evergrande-led market crash drove the price below $2,700 on Sept.20, its lowest level in 47 days. Curiously, just three weeks ago, Ether was testing the $4,000 psychological barrier, but this changed after mounting crypto regulatory concerns and the fear of China's debt markets triggering a global sell-off intensified.

This week U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler spoke to the Washington Post about renewed plans to regulate the crypto sector and the growing stablecoin market.

Ether's negative price trend reversed on Sept. 22 after U.S. Federal Reserve Chairman Jerome Powell confirmed the continuation of the central bank's monthly bond purchasing program. Powell also made clear that no interest rate hike should be expected in 2021.

Ether price at Bitstamp in USD. Source: TradingView

Even though the current $3,000 level represents a 25% retraction from the recent $4,000 peak, Ether price still reflects a 215% gain in 2021 and the network's adjusted total value locked (TVL) jumped from $13 billion in 2020 to $60 billion, signaling strong adoption despite surging gas fees.

Bitcoin options aggregate open interest for Sept. 24. Source: Bybt.com

As shown above, bulls got caught by surprise because 72% of call (buy) instruments were placed at $3,200 or higher. Consequently, if Ether remains below that price on Friday, only $260 million worth of neutral-to-bullish call options will be activated on the expiry.

A call option is a right to sell Bitcoin at a predetermined price on the set expiry date. Thus, a $3,200 cut option becomes worthless if Ether remains below that price at 8:00 am UTC on Sept. 24.

Bulls still have an advantage in Friday's $1.55 billion expiry

The 1.48 call-to-put ratio represents the difference between the $920 million worth of call (buy) options versus the $620 million put (sell) options. This bird...

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