Volatility expected as $490M in ETH options expire shortly after the Ethereum Merge
Given the current state of the wider crypto market, some traders might be surprised to learn that Ether (ETH) has been trading in an ascending trend for the past 17 days. While the entire cryptocurrency market experienced a 10% decline on Sept. 13, Ether price held firm near the $1,570 support level.
In less than 12 hours the Ethereum network is scheduled to undergo its largest ever upgrade and the possibility of extreme volatility should not be ignored. The transition to a Proof-of-Stake network will be a game changer for multiple reasons, including a 98.5% cut in energy use and reduced coin inflation.
During an upgrade, there is always the risk of multiple malfunctions, especially in more complex systems like the Ethereum Virtual Machine processing. Even if the upgrade has been relatively smooth on previous testnet versions, it is impossible to predict the outcome of the decentralized applications and second-layer solutions plugged into Ethereum’s ecosystem.
That is precisely why the $490 million Ether options expiry on Aug. 16 will put a lot of price pressure on both sides, even though bulls seem slightly better positioned as Ether nears $1,600.
Ether's failure to break the $2,000 resistance on Aug. 14 and its subsequent plunge to $1,420 on Aug. 29 gave the bears the signal to expect continuation of the downtrend. That becomes evident as only 12% of the put (sell) options for Sept. 16 have been placed above $1,600. Thus, Ether bulls are better positioned for the expiry of $490 million weekly options.
A broader view using the 1.06 call-to-put ratio shows a relatively balanced situation with bullish bets (calls) open interest at $252 million versus the $238 million put (sell) options. Nevertheless, as Ether currently stands
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