Ethereum breaks another market prior to end-of-year rally
Ethereum options hit all-time high as Ethereum continues to advance in local bullish rally that began in late November, Wu Blockchain reports.
Contracts open interest spikes
Ethereum options currently remain at the historical peak in open interest that is currently staying at $7 billion. On Dec. 31, almost 700,000 options are going to be delivered with a “bullish” Put/Call ratio of 0.47. The approximate max pain price is $2,500 for the currently open Ethereum contract with expiry on Dec. 31.
The increase in options opening interest closer to the end of the year is not something new for Ethereum. Ethereum’s open interest typically increases towards the end of the year as volatility in the cryptocurrency market increases and traders tend to hedge their positions.
What does high open interest tell traders?
Usually, options are utilized as a reflection of current market conditions. Since Ethereum is moving in both short and long-term bullish trends, call (buy) options are prevailing on the market with the majority of traders betting on the asset’s price spike to $5,000.
But while some traders can use options for speculative trading, others use them to hedge their positions. By opening puts on stocks such as $ 4,300, traders hedge their positions in the event of unexpected market volatility.
Ethereum’s previous ATH currently remains at $4,880, and more analysts are expecting the second-largest cryptocurrency on the market to reach the long-awaited milestone by the end of the year when most altcoins have historically reached new highs.
