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Ethereum Price Dips Under $3k, But Derivative Data Implies Positivity

The crypto market has effectively recovered despite the regulations and the crypto-focused infrastructure deal that was passed by the Senate in the United States recently. While the infrastructure bill may encounter certain implications in the House of Representatives, the approved version of the bill did not provide sufficient clarity on the definition of a crypto broker. Numerous figures in the crypto space believe the infrastructure bill will harm the industry in the future.

Due to the price rally in the past three weeks, the price of Ethereum went up by 81% which caught the attention of professional traders and bulls. Ether’s $430 million worth of contracts are set to expire according to the upcoming week’s options expiry report. Data implies that if Ether holds above $3k by the end of the week, only 7% of put options will be available between neutral and bearish levels.

Ether’s price rally over the past three weeks could have been caused by the growing number of institutions adopting cryptocurrencies. According to a recent report, 10 out of 100 largest hedge funds in terms of assets under management, are clients of the crypto exchange platform Coinbase. In the second quarter of 2021, the exchange traded a larger volume of Ether as compared to Bitcoin.

The exchange speculated the new use cases of decentralized finance, non-fungible tokens, and smart contracts could have been the cause of Ether’s large volume trade. In either case, the price of Ethereum soared high and bulls were utilizing the options expiry on Friday to its potential.

The initial data this week showed a fair balance between neutral and bullish call options and protective puts, implying that bulls lacked the confidence to bet in the recent rally. The data indicates that bullish traders were not expecting a rally above $3k since a majority of the bets had been placed around $2k.

Due to the lack of confidence, and low expectation, only $2 million puts will be available in the options expiry if Ether holds above $3k.

On the other hand, $165 million worth of call options has been placed on $3k or under, which would certainly be advantageous to the neutral-to-bullish instrument. If bulls fail to hold the $3k support, the gap will be reduced by $120 million. It is evident that bulls are in control, and will likely push for additional bullish bets in the future.

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