Ether tests ,200 but better positioned for .13 billion options expiration on November 25

Ether tests $1,200 but better positioned for $1.13 billion options expiration on November 25

Regardless of whether one analyzes the longer-term or weekly Ether (ETH) time frame, there is little hope for the bulls. Along with the negative 69% year-to-date performance, a descending channel has put pressure on ETH price while providing resistance at $1,200.

Ether/USD 4 hour price index. Source: Trading View

Regulatory uncertainty continues to weigh on the sector. For example, Starling, a UK-based digital bank, announced on November 22 that it would no longer allow customers to send or receive money from digital asset exchanges or merchants. The bank described cryptocurrencies as “high risk and heavily used for criminal purposes”.

Another worrying news for the Ethereum ecosystem concerned decentralized finance (DeFi) platform AAVE, which suffered a short-selling attack on November 22 aimed at taking advantage of under-collateralized loans.

Curiously, a similar exploit occurred on the Mango Markets DeFi app in October. While not a direct attack on the Ethereum network, the attacker showed critical flaws in some major decentralized collateral lending applications.

Additionally, Singapore-based cryptocurrency lender Hodlnaut is reportedly under police investigation over allegations of cheating and fraud. The problems began on August 8 after the lending company mentioned a liquidity crisis and suspended withdrawals on the platform.

Finally, on November 22, US Senator Elizabeth Warren correlated the demise of the FTX exchange to 2008 subprime mortgages and penny stocks used for pump-and-dump programs. Warren said FTX’s collapse should be a “wake-up call” for regulators to enforce crypto industry laws.

That’s why the $1.13 billion Ether Monthly Options expiration on Nov. 25 will put strong price pressure on the bulls, even though ETH saw 11% gains between Nov. 22-24. .

Most bullish bets were placed above $1,400

Ether’s rally towards the resistance of $1,650 on November 5 gave bulls a signal to expect a continuation of the uptrend. This becomes evident as only 17% of the November 25 call (call) options were placed below $1,400. Therefore, the Ether bears are better positioned for the monthly expiry of the next $1.13 billion options.

Ether options aggregate open interest for Nov. 25. Source: CoinGlass

A broader view using the call-to-put ratio of 1.44 shows a skewed picture with bullish bets (calls) at $665m versus puts (puts) at $460m. Nonetheless, with Ether currently hovering around $1,200, the bears have a dominant position.

For example, if the price of Ether remains below $1,250 at 8:00 UTC on November 25, only $40 million of these call options will be available. This difference occurs because there is no point in the law buying Ether at $1,250 or $1,500 if it is trading below that level at expiry.

Bears could pocket a profit of $215 million

Below are the four most likely scenarios based on the current price action. The number of option contracts available on November 25 for buy (bullish) and sell (bearish) instruments varies depending on the expiry price. The imbalance in favor of each side constitutes the theoretical gain:

  • Between $1,050 and $1,150: 800 calls versus 20,200 puts. The net result favors the bears by $215 million.
  • Between $1,150 and $1,250: 3,300 calls versus 15,100 puts. The net result favors bearish bets of $140 million.
  • Between $1,250 and $1,300: 4,700 calls versus 13,200 puts. The net result favors the bears by $100 million.
  • Between $1,300 and $1,400: 8,700 calls against 8,900 puts. The bottom line is balanced between bulls and bears.

This raw estimate considers call options used in bullish bets and put options exclusively in neutral to bearish trades. Even so, this oversimplification fails to account for more complex investment strategies.

A 7-Year-Old Dormant Bitcoin Wallet Could Complicate Things for Ether Bulls

Ether bulls need to push the price above $1,300 on November 25 to balance the scales and avoid a potential loss of $215 million. However, Ether bulls seem to be out of luck since a Bitcoin wallet linked to the 2014 Mt. Gox hack moved 10,000 BTC on Nov. 23.

Ki Young Ju, the co-founder of blockchain analytics firm Cryptoquant, verified the results, noting that 0.6% of funds were sent to exchanges and may represent sell-side liquidity.

If the bears dominate the November ETH Monthly Options expiry, it will likely add firepower for further downside bets. Thus, at the moment, there is no indication that the bulls can reverse the situation and avoid the pressure of the two-week descending triangle.

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.