This comes as Ethereum derivatives traders continue to make bets on cryptocurrency
According to glassnodeEthereum derivatives traders are betting on ETH prices above $2,200 and up to $5,000 ahead of the September 19 merge event.
The on-chain analytics firm notes that, for the first time, Ethereum options’ open interest at $6.6 billion surpassed that of Bitcoin at $4.8 billion. This comes as Ethereum derivatives traders continue to make bets on the cryptocurrency in a clear direction, particularly on the impending Merge update.
It notes that while not yet at an all-time high, ETH options open interest is on the verge of doing so, while bitcoin’s open interest is still well below ATH’s top of just 35%.
Call options are much larger than put options, as traders envisage ETH prices above $2,200 and a sizable open interest out to $5,000. However, as the maximum pain price is now approximately $1,350, the greatest number of options would expire out of the money.
Glassnode said this appears to be a fairly sophisticated market position, providing additional evidence that institutional capital is being held in the maturing liquidity of the futures and options markets.
According to the on-chain analytics firm, the volatility smile has shifted to an extremely bullish bias due to the significant buy-side demand for September expiry ETH call options. On the contrary, the shape and scale of the September to October volatility smile indicates a comparatively decreased demand for ETH exposure through options after the Merge event.
Expectations after merge update
Glassnode reports that traders have been using call options to speculate on the price of ETH through September, but post-September futures and options backwardation suggests a “sell-the-news” sentiment is in play. . The latter indicates that traders are setting themselves up for a “buy rumour, sell news” kind of phenomenon for the merge.
Glassnode indicated in its report that with eyes on the Merge for both upside speculation and a sell-the-news event after the fact, futures traders are pricing ETH at a discount post-Merge and are willing to pay a premium for downside protection.
Ethereum is trading at $1,779, up 2.63% over the past 24 hours.
