Recent Ethereum (ETH) consolidation around $3,500 has lowered expectations

Ethereum’s (ETH) recent consolidation at around $3,500 has significantly reduced market expectations for monthly options expiration above $4,000. Bulls were initially optimistic, motivated by the potential approval of an Ethereum spot exchange-traded fund (ETF) by regulators, which led to a 23% gain on May 20. However, since then, the Ethereum price has failed to sustain higher levels. $3600.

A total of $3.5 billion in monthly ETH options are set to expire on June 28 on leading exchange Deribit, followed by $286 million on OKX and $142 million on Binance. However, as the SEC continues to review ETF providers’ S-1 filings, the likelihood of bullish bets exceeding $4,000 remains low.

Bears Didn’t Expect Ether to Surpass $3,000

Ethereum bulls did not expect the delay between regulatory approval of the spot ETF and the start of actual trading, which was confirmed by SEC Chairman Gary Gensler. The exact schedule remains uncertain for the next three months. Given this lack of momentum, bullish bets on options expiring on June 28 are unlikely to yield results.

Meanwhile, Ethereum bulls were caught off guard after investors’ major regulatory concerns were resolved on June 19, when the Securities and Exchange Commission ended its investigation into whether Ethereum could be classified as title, as stated in a letter to ConsenSys. The move means Consensys is no longer subject to scrutiny regarding potential ETH sales.

Open interest for Deribit’s monthly options expiration on June 28 stands at $3.5 billion. However, the actual result is expected to be lower as prices above $4,000 and below $3,000 are currently considered unrealistic.

Ether options open interest June 28 on Deribit, ETH. Source: Flow

A put-to-call ratio of 0.62 indicates an imbalance between open positions (call) of $2.2 billion and call options (sell) of $1.3 billion. However, if the price of Ether remains around $3,500 at 8:00 UTC on June 28, only these $257 million in puts will be relevant. This gap occurs because the right to sell ether at $3,300 or $3,400 no longer matters if ETH trades above these levels at expiration.

Bulls aim for $3,800 for $500 million gain

Below are the four most likely scenarios, based on current price trends. Options contract availability for June 28 Calls and Options varies based on settlement price. The balance of potential gains for each side is determined as follows:

  • Between $3,200 and $3,400: There are 13,000 calls for 97,200 points. The net result favors put options of $280 million.
  • Between $3,400 and $3,600: There are 43,900 calls for 41,600 points. The result is roughly balanced between call and put options.
  • Between $3,600 and $3,800: There are 104,200 calls for 24,400 points. The net result favors put options (calls) of $300 million.
  • Between $3800 and $3900: There are 141,600 calls for 9,600 points. The call options feature increases to $500 million.

about: SEC Drops Ethereum Investigation to Avoid “Embarrassing” Lawsuit

This rough calculation assumes that calls are primarily used for bullish bets and puts are used for neutral to bearish positions. However, this simplification does not take into account more complex investment strategies.

Barring an unexpected spot ETF approval before June 28, probability supports a breakeven outcome of around $3,500. This should be considered a victory for the bears, especially since Ethereum was trading above $3,800 just two weeks ago.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.

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