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ETH recorded a 53% gain from July 13 to July 18, giving the buyers the advantage as the $1.26 billion monthly options expire soon. This move comes as the Ethereum development team tentatively scheduled The Merge (“Merge”) event, which aims to convert Ethereum 1.0 to Ethereum 2.0 (from the built-in Proof-of-Work mechanism to Proof-of-Work). -of-Stake).
* The Merge can be said to be the most important milestone in Ethereum’s history up to the present time, when this blockchain accepts changes to the consensus algorithm to both solve the problem of scale and minimize the environmental impact. field of mining operations.
Some analysts say that The Merge can give Ethereum and users significant cost savings because it eliminates the need for additional ETH issuance. Because the Ethereum 1.0 form requires the issuance of additional ETH to fund the PoW operation – the consensus mechanism consumes a lot of energy.
Besides, how the change of the rules for issuing ETH or burning tokens will affect monetary policy and the rationality between the two is still an open question. However, the recent exchange of ETH developers on July 14th led to a sharp increase in the price of ETH.
On July 26, the number of active addresses on the Ethereum network spiked, sparking speculation about whether Ether was planning to break its previous all-time high record.
According to a report from analytics firm Santiment, the number of addresses active 24 hours daily reached 1.06 million, far exceeding the record of 718,000 set in 2018. Hypotheses like “Binance performs maintenance scans” have emerged. , but nothing has been confirmed yet.
The main victims of Wednesday’s impressive 20% Ether rally were short traders, as they faced a total of $335 million in liquidations at derivatives exchanges, according to Coinglass. .
Sellers and confidence maintain below $1,600
The open interest for Ether’s July expiration monthly options is $1.27 billion. But in reality, this number is lower because sellers have been overly optimistic, after ETH stood below $1,300 between June 13 and 16.
The pump above $1,500 on July 27 caught the sellers by surprise as only 17% of July 29 put (put) options were placed above that price.
A call-to-put ratio of 1.39 shows a dominance of the $730 million open interest over the $530 million put (put) option. However, when Ether stands near $1,600, most bearish bets can become worthless.
Advantage for buyers even if Ethereum price is below $1,600
The number of options contracts available on July 29 for the call (bull) and put (bear) instruments varies, depending on the expiration price. An imbalance in favor of each constitutes a theoretical profit:
- From $1,400 to $1,500: 120,400 calls versus 80,400 bookings. The net result supports call (bull) instruments by an additional $60 million.
- From $1,500 to $1,600: 160,500 calls versus 55,000 bookings. The net result gives the buyers $160 million.
- From $1,600 to $1,700: 187,100 calls versus 43,400 bookings. The net result favors call (bull) instruments by an additional $230 million.
- From $1,700 to $1,800: 220,800 calls versus 40,000 bookings. The advantage of the buyers increased to 310 million USD.
By the time of writing the article 3:00 PM on the afternoon of July 29 in Vietnam time, the ETH price is above $ 1,700.
Sellers should accept this loss and focus on August options
Ether buyers need to sustain the price above $1,600 on July 29 to secure a $230 million profit. On the other hand, the bears’ best-case requires a push below $1,500 to reduce losses to $60 million.
Considering the $330 million worth of leveraged short positions liquidated on July 26 and July 27, sellers will have less profit to put downward pressure on ETH price. With this said, the bulls are better positioned to continue driving ETH higher after the July 29 monthly options expiration.
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