The ratio between the open interest of ether (ETH) put and call options rose to their highest level since last May at $0.47 on Tuesday, according to data presented by crypto data analytics and news firm The Block.
This may suggest the creation of bearish bets in the market ahead of the upcoming series major upgrade As far as Ethereum network at 12th of April, which would, among other things, allow the withdrawal of Ether tokens at stake.
A ratio of open interest for put and call options below 1 means that investors favor call options (a bet on a rise in price) over put options (a bet on a fall in price).
While the ratio is still below 1, meaning that investors still favor bullish options bets, the recent increase in the ratio suggests that these bullish bets have been pulled back sharply in recent days. .
ethereal The put/call open interest ratio has seen a sharp jump from the level of 0.37 near the end of March.
In addition to indicating the possibility of selling after the upgrade, an increase in the ratio may also indicate that more traders are taking an interest in shorting. ether In view of the recent price gains.
ETH changed hands just above $1,900 in recent days, making decent progress towards $2,000.
It is worth noting that a large drop in the dollar value of Ether option open interest accumulated since late March could also explain the increase in Ether’s put/call ratio.
Open interest in Ether options was last low at $5.0 billion, with a recent high of $7.5 billion.
Open interest often sees a large drop at the end of each quarter as investors are in the midst of a wave of option expirations and it appears that bullish call option bets are likely to expire.
It will be interesting to see whether investors rebuild their options exposure in the coming quarter and to what extent (if any) this lowers the put/call ratio again.
Stacked ETH Withdrawal Coming – Will There Be an ETH Dump?
on 12th In April, the Ethereum network will undergo a series of upgrades that will, first and foremost, enable the withdrawal of staked Ether tokens from staking smart contracts.
The series of upgrades have been dubbed “Shapella” to represent the combination of the Shanghai and Capella names.
Shanghai refers to a hard fork that occurs at the execution layer of the Ethereum blockchain, while Capella is the name of an upgrade that occurs at the consensus layer.
While analysts see the development as a long-term positive for the network – it is believed that more flexible staking withdrawals will eventually attract many more ETH owners to stake their tokens – some have warned that investors may There could be short-term price pressure in the form of Sell ETH tokens that are stuck in long contracts.
eth staking Has been active on Ethereum’s Beacon chain since late 2020, prior to its merger with the proof-of-stake of the Ethereum blockchain last September.
Others warn that in light of ETH’s astonishing more than 55% gain since the start of the year, a successful Shanghai upgrade could trigger profit-taking that could cause ETH price to decline in the short term. Is.
ETH bulls can pounce on any decline
However, the short-term technicals for ETH are looking very bullish right now. The cryptocurrency recently pushed north of a key resistance area near the $1,850 level and is eyeing an imminent test of the $2,000 level.
In recent weeks, the cryptocurrency has consistently found strong support at its 21-day moving average. All its major moving averages are pointing upwards in a continuous sequence, which is another bullish sign.
In the longer term, the technicals are also positive. The 14-day Relative Strength Index (RSI) for ETH is not yet in the overbought zone, suggesting reduced risk for near-term profit-taking.
ETH also saw a strong bounce off its 200DMA last month, a strong medium-term bullish indicator.
The “golden cross” (when the 50-day moving average crosses above the 200-day moving average) in early February is another good sign for ETH’s medium-term technical outlook.
Also, to overcome macro tailwinds, such as expectations that the Fed will cut interest rates later this year. bank crisis and recessionContinue to provide comprehensive support to the crypto markets.
In the near term, the bulls will continue to buy any further declines in Ether price.
A post-Shanghai upgrade sell-the-news driven resistance-support back in the $1,700 area, which roughly coincides with ETH’s 50-day moving average, could present a good buying opportunity.