Ether (ETH) bulls seem excited by the recent $4,870 all-time high that was hit on Nov. 10. While it was a new high in U.S. dollar terms, ETH is still 51% below June 2017’s price in Bitcoin (BTC) terms. But it’s entirely possible that the 0.155 BTC level reached in the previous cycle reflected the overzealous expectations that were rampant during the initial coin offering frenzy.
The Ethereum network’s success has caused congestion and high fees, bringing the competition closer. For example, in mid-2017, the leading “competitors” were Ethereum Classic (ETC) and NEM (XEM). Combined, those represented a mere 13% of Ether’s $37 billion market capitalization.
Today, the aggregate capitalization of Binance Coin (BNB) and Solana’s SOL stand at 32% versus Ether’s $557 billion.
At the moment, Ether is trading in an ascending channel with a target at $5,000, but bears apparently still have reasons to doubt the network’s ability to deliver Eth2 by year-end.
This year, Ethereum’s leading use case, decentralized finance (DeFi), has gathered regulators’ attention — and not in a good way. On Nov. 9, United States Securities and Exchange Commission Commissioner Caroline Crenshaw published her opinion in the article titled “DeFi risks, regulations and opportunities.” In it, she mentions that the sector lacks market protections, and she raises concerns about pseudonymity and market manipulation.
On the other hand, the value locked in the Ethereum network’s smart contracts reached a $94 billion all-time high, marking a 42% growth in three months. So, regardless of the competition or the $50 average transaction fee, there’s undoubtedly a growing demand for its DeFi, nonfungible token (NFT), oracle and decentralized marketplaces.
What is interesting is even with Ether’s positive price action, which is backed by strong usage metrics, bearish put (sell) options dominate Friday’s $700 million ETH options expiry.
At first sight, the $415 million in put (sell) options dominate the weekly expiry by 31% compared with the $285 million in call (buy) instruments. The 0.69 call-to-put ratio is deceptive because the recent rally will likely wipe out most bearish bets.
For example, if Ether’s price remains above $4,700 at 8:00 am UTC on Nov. 12, only $10 million worth of those put (sell) options will be available at the expiry. There is no value in a right to sell Ether at $4,700 if it’s trading above that price.
Bears could still tip the scale below $4,600
Below are the four most likely scenarios that consider the current price levels. In addition, the data shows how many contracts will be available on Nov. 12 for both bulls (call) and bear (put) instruments.
The imbalance favoring each side represents the theoretical profit:
- Between $4,500 and $4,600: 7,500 calls vs….
Read More: cointelegraph.com