KEY POINTS
- Based on options data, traders are confident of ETH price appreciation in the spot market
- Money backing the $500 price level in the options market indicates that it is feasible for ETH to reach that target in 40 days
- Rising gas fees continue to plague the Ethereum blockchain, but it is indicative of the cryptocurrency’s demand
With Ethereum reaching $420 in the spot market, traders looked at the open interest on ETH futures and options to anticipate a future price for the world’s second largest cryptocurrency. Futures has grown 250% in the last three months while data on ETH options suggests traders are bullish that ETH would reach $500 soon.
Comparing ETH future’s contract price against the spot price indicates a 20% annualized premium, which suggests that traders are confident of ETH price appreciation in the spot market, Cointelegraph reports.
In the options market, the put/call ratio is currently at a neutral position, different from three months ago when put options were 20% smaller than the call options. In this market, call options are for neutral/bullish strategies while put options are for bearish strategies.
Still, Cointelegraph looked at skew.com’s ETH 25d skew chart to better interpret the options data. The chart suggested that traders were less bullish beginning on Aug. 13, when the cryptocurrency broke above $400. While still bullish, the indicator’s current level was just similar to that of the previous month when ETH traded at $240, the news outlet said.
After breaking past $400, ETH continued its rally which peaked at $440 on Aug. 14. But the volume was weaker against the previous price run. ETH is currently at oversold levels based on RSI indicator and above the upper line of the Bollinger band.
Currently, data suggests, there are more call options than put options, with call options from $340 to $880 setting to expire in September with a total value of $4.4 million and an open interest of $40.1 million. Put options have a current value of $940,000.
Still, most call options are at the prices $480 and above, with a total worth of around $1 million. Cointelegraph reporter Marcel Pechan suggests that the money backing the $500 level price should be indicative that it is feasible for ETH to reach that target in 40 days.
Backed by excitement with decentralized finance, Ethereum’s currency gas fee is a signal of the blockchain’s current demand, and this demand has fueled Ethereum’s price appreciation. Arthur Hayes, the CEO of derivatives exchange BitMEX, also predicts a $500 price value for the second largest cryptocurrency “soon“.