Investors Anticipate Ether Price Appreciation in Early 2024
According to data from the Deribit derivatives exchange, there has been a growing number of outstanding calls compared to puts in ether options open interest ahead of the end-of-January expiry date. This indicates that many investors expect the price of ether to increase early next year. The put-call ratio for ether options is 0.44 for the year-end expiry, meaning there are 4.4 puts for every 10 calls. However, for January 2024, the ratio is 0.19, indicating around 2 puts for every 10 calls, a much more bullish split.
Bullish Sentiment in the Market
A put-call options ratio below one signifies that call volume exceeds put volume, indicating a bullish sentiment in the market. Call options buyers are implicitly bullish on the market, while put buyers are bearish. The current ether put-call ratio on Deribit is 0.35, as per The Block’s Data Dashboard.
Outstanding Calls Outnumber Puts
Deribit data also reveals that there are over twice as many outstanding calls compared to puts ahead of the December 29 expiry. The largest group of call options outstanding for the end-of-month expiry are at a strike price of $2,500. This suggests that many derivatives traders are betting on the price of ETH to rise above this level by the end of December.
Ether has seen a more than 1% increase in the past 24 hours and is currently trading at $2,348.
Increase in Ether Options Open Interest
There has been a significant increase in ether options open interest leading up to the upcoming end-of-month, quarter, and year expiry date on December 29. This December expiry is the largest one Deribit currently has. Approximately $3.3 billion out of a total of $7 billion in ether options notional open interest will expire on December 29, accounting for almost 50%.
An increase in open interest indicates new money entering the market, suggesting growing participation and potential liquidity. It also signals the entry of sophisticated traders into the cryptocurrency market and the potential for improved price discovery.
Options are derivative contracts that give traders the right but not the obligation to buy or sell an underlying asset at a predetermined price on or before a specific date. Call options provide the right to buy, while put options offer the right to sell.
Hot Take: Investors Expect Ether Price Surge in Early 2024
Based on the increasing number of outstanding calls compared to puts in ether options open interest ahead of the end-of-January expiry date, it seems that many investors anticipate a surge in the price of ether in early 2024. The bullish sentiment is reflected in the put-call ratio, which shows a higher ratio of puts to calls for January 2024 compared to the year-end expiry. Additionally, there is a significant increase in ether options open interest leading up to the December 29 expiry, indicating growing participation and potential liquidity in the market. This suggests that investors are optimistic about the future price movement of ether and are actively engaging in derivatives trading to capitalize on potential gains.
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