The price of Ether (ETH) has risen 88% since November, astonishing as the top altcoin secures its 2022 high of $750.
In addition to the upcoming launch of CME ETH futures scheduled for February 8, the phenomenal growth of total value locked (TVL) in the Decentralized Finance protocol is also playing a major role.
As the data above shows, investors are even more confident that Eth2 has been a success, despite potential delays and actual implementation hurdles.
Another possible bullish factor in the background is the last 2 years low in ETH miners balances. This certainly reduces the potential selling pressure and opens room for further bullish continuation.
Over the past three months, open interest in Ether options grew 150% to a total of $880 million. This remarkable increase came when the cryptocurrency broke the $700 resistance, and hit its highest price since May 2018.
Put-call Ratio Reversing Bullish
By measuring whether there is more activity through call or put options, one can gauge the overall market sentiment. In general, call options are used for bullish strategies, while put options are neutral to bearish.
Despite the recent price hikes, the put/call ratio has fallen considerably. This move indicates that more bullish call options have dominated volume. One should expect the opposite whenever a trader locks in profits or braces for a potential downside.
That is in stark contrast to the 0.94 level two weeks ago, which indicates that put options are well offset by neutral call options to advances.
Data Shows Traders Expect A 20% Increase To $880
Opportunities from options trading are currently calculated according to the Black & Scholes model. The Deribit exchange presents this information as a ‘delta’. In short, this is a percent based chance for each strike.
According to the data above, strike $880 for January 25 has a 34% chance, whereas strike The most traded $960 holds an odd 25% according to the options pricing model.
Note that statistical models tend to be too conservative, because even strike $720 only has 59% odd.
March Expiration Also Very Bullish
With 86 days left until the end of March 2022, the possibility of Ether hitting $880 is even more probable.
Strike The same $880 now holds an odd 49% according to the Black & Scholes pricing model, while a staggering $1,120 expiry holds 33%.
As shown above, the options for March 2022 trade the relevant volume amount and cost $114 each. This data is irrefutable evidence of traders’ bullish sentiment.
Market Futures Data Reflects Bullish Sentiment
A better way to gauge a professional investor’s sentiment towards the market is to analyze the futures market premium. It is measured by the difference between the long-term future contract and the current spot price of Ether (ETH).
The chart above shows that the indicator peaked at 5.8% on December 19 and hit the same level again on December 28 as the price of Ether hit multi-year highs. Sustained futures premium above 3.5% reflects optimism, although far from being excessive.
The current 4.3% rate equals 18% annual premium and is significantly higher than the level seen in previous months. This suggests that despite hitting a swing high at the $750 level, professional traders remain confident in Ether’s future potential.
It may be too early to determine whether the derivatives market will dampen its optimism, but for now, the bulls seem to be in full control.
While there is always the possibility of a correction in the price of Ether, the possibility is not strong enough to cause havoc as the market shows no signs of over-optimism.