The cryptocurrency derivatives market is buzzing with anticipation fueled by the potential approval of a spot Ethereum (ETH) exchange-traded fund (ETF) in late May. Bitfinex Head of Derivatives Jag Kooner paints a picture of rising optimism, with traders positioning themselves for potential price climbs through ETH option contracts. Here are the expectations for the leading altcoin…
May expectation in that altcoin project
A May 23 deadline for U.S. Securities and Exchange Commission (SEC) decisions on VanEck and Ark/21Shares’ filings is hanging in the air. Kooner emphasizes that there has been a significant increase in open interest from the buyer side for long-term options expiring in March, April and May. It is “heavily skewed towards the long side” and the put-call ratio of 0.31 paints a clear picture. So, investors are bullish. But there is a change. Some groups are being cautious and pushing the potential approval to 2025 or 2026. As Kooner emphasizes, the crux of the matter lies in the SEC’s classification of ETH as a security or commodity. This affects market reactions and forecasts.
Looking at derivative data, we see that February expirations revealed a maximum loss price for ETH around $2,300, with the highest open interest concentrated around $2,400-2,450. This shows that a potential decline is feared, but optimism prevails overall. Moving to April and later expiration dates, the maximum loss price climbs to $2,400. However, the upward trend is gaining strength. The heavy buy-side bias is heading towards a strike price of $2,900. So, this points to the expectation of a significant increase in the price of ETH.
The coming months are critical for ETH
However, there is a risk of a surprise in March. The maximum loss price remains around $2,000. However, open positions are spread over a wider range of $2,000-$3,000. Kooner attributes this cautious near-term stance to the FED’s recent statements against possible interest rate cuts before May 2024. So, what does all this mean? The Ethereum derivatives market awaits the SEC’s decision. Meanwhile, he is in a state of flux, oscillating between bullish bets and cautious hedging. Potential ETF approval by May looks attractive. But regulatory uncertainty and broader market forces add layers of complexity.
One thing is clear: The coming months will be crucial for Ethereum. Will the bulls, fueled by ETF dreams and price volatility, triumph? Or will cautious whispers gain traction, pushing a definitive decision into the future? Only time will tell, but one thing is for sure. Because the Ethereum derivatives market will be watching with bated breath.
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