The excitement around ETH is growing as the leading altcoin Ethereum (ETH) will transition from proof-of-work (PoW) to proof-of-stake (PoS). Meanwhile, ETH-based derivatives are also starting to “warm up.” Here are the latest data for ETH…
What do Ethereum options and derivatives show?
Total open interest in ETH options on top exchanges; On July 2, it was at $2.74 billion. But on July 29, it rose to over $7 billion. It’s currently $5.9 billion. The open position shows the value of all pending contracts that have not yet been paid. Meanwhile, the total open position of ETH futures was $4.71 billion on July 2. This amount reached $7.58 billion on July 30.
Joshua Lim, head of derivatives at Genesis Global Trading, said the increase in activity is due to macro hedge funds positioning themselves ahead of the Ethereum “merge”. As we have also reported as Kriptokoin.com, Merge refers to the transition from proof-of-work (PoW) to proof-of-stake (PoS). ETH saw its price soar in anticipation of Merge. The price of Ethereum’s native token has increased by 59 percent in the past month. Merge is expected to take place in September. You can see the monthly chart of ETH below:
ETH is popular among hedge funds
Also, Joshua Lim said, “A more recent phenomenon has been the popularity of low-premium options structures in ETH rather than macro-optional hedge funds positioned for Merge.” According to the expert, with a common structure between them, ETH/USD; It could see a spot price of around $3,000 in December 2022. According to the expert, these long-term structures inflate the open position on ETH options. At the time of writing, ETH is changing hands around $1,680. So we’re about $1,320 below the level of 3,000 that Lim said could be seen as a result of movement in the options and derivatives market.
Overall, these strategies seem complex. It requires traders to trade more derivatives, which affects volumes and open positions. For example, a call is twice as much as two short call options and one long call option. “The ETH options market makes sense right now as everyone is speculating on the merge,” another institutional trader said. Indeed, the total open interest in ETH options is greater than the total open interest of the BTC options markets. The value of open interest in BTC is $5.1 billion.
The activity in the ETH derivatives market becomes more striking considering the Bitcoin derivatives market. The ratio of spot trading volumes and futures volumes in BTC derivatives is increasing. This indicates that activity in Bitcoin trading has shifted to trading the underlying asset against futures. Currently, the opposite phenomenon is happening in ETH.
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