Ethereum Price May Fall As $1.1 Bln Options Expiration On Friday Approaches.

Ethereum Price May Fall As $1.1 Bln Options Expiration On Friday Approaches.

2022-01-28 | Mike Hallen

Ethereum Price May Fall As $1.1 Bln Options Expiration On Friday Approaches.

The price of Ethereum (ETH) fell under $3,000 on January 21 as regulatory ambiguity continued to weigh on the industry and allegations that the US Securities and Exchange Commission is scrutinizing DeFi's high-yield crypto lending products circulated.

The Russian Finance Ministry presented a cryptocurrency regulatory framework for assessment on January 27. The concept implies that crypto activities take place within standard banking infrastructure, with procedures in place to identify traders' personal data.

Additional bad news followed when Ryan Korner, a senior special agent from the IRS Criminal Investigation's Los Angeles field branch, made critical statements throughout a virtual session organized by the USC Gould School of Law.

Ethereum bulls are attempting to ascertain whether the decline below $2,140 on January 24 was the last low for the present slump. This 47.5 percent drop in 30 days resulted in the liquidation of $1.58 billion in long futures contracts.

Take note of how Ether's price has been going downward for the past 75 days, adhering to a channel that now supports $2,200 as a support level. A 19% price gain from the present $2,500 level to the $3,000 resistance level, on the other side, would not certainly indicate a trend reversal.

Surprisingly, call (buy) option instruments greatly outnumber put (sell) option instruments in Friday's $1.1 billion expiries, although bearish are best situated now that Ethereum has settled below $3,000.

eth

ETH/USD 1 DAY PRICE CHART - SOURCE - COINMARKETCAP.COM

A broader perspective utilizing the call-to-put ratio reveals Ether bulls have an 82 percent edge since the $680 million call (buy) instruments have more open interest than the $410 million puts (sell) options. The 1.82 call-to-put indications, on the other hand, are deceiving since the price fall under $3,000 rendered most bullish bets useless.

According to the information, bulls are in for a significant loss

Based on the present price activity, the three most likely possibilities are as follows. On Friday, the amount of options contracts available for bulls (calls) and bears (puts) varies based on the expiry price. The potential profit is the imbalance favoring each side:

Within $2,200 and $2,400, there are 3,200 calls and 121,500 puts. The total outcome is a $270 million advantage in favor of put (bear) instruments.

Within $2,400 and $2,700, there are 19,500 calls and 95,500 puts. The overall outcome is $190 million in favor of the bears.

34,700 calls vs. 73,400 puts within $2,700 and $2,900. The net result is $110 million in favour of the put (bear) options.
This rough assessment takes into account just call options used in bullish wagers and put options used primarily in neutral-to-bearish transactions. Nonetheless, this simplicity excludes more complicated investing options.

Bears will attempt to keep ETH under $2,400.

To make a $270 million profit on Friday, ether bears require a moderate push under $2,400. Bulls, on the other side, would require a price rebound of 8.4 percent from the present $2,500 level to minimize their loss by 58 percent.

Given the bearish regulatory headlines, Ethereum bulls are highly improbable to take on additional risk at this time. As a consequence, bulls must focus their efforts on salvaging a portion of this setback by holding the Ethereum price over $2,500, culminating in a $170 million loss.

January appears to have provided Ethereum bearish the edge in terms of maintaining price pressure in the short term.

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