Ether Options Misaligned with Optimistic Market Sentiment

Connor Brooke

Cryptocurrency
Market 1

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Early this month, market analysts suggested that Ether (ETH), Ethereum’s native cryptocurrency, could emerge as a leading asset in the upcoming months and serves as a fundamental component of a diverse crypto portfolio. However, current trends in the options market do not reflect this positive outlook.

Data from Amberdata indicates that options linked to Ether are leaning towards expectations of a price drop over the next three months, with a slight inclination towards price strength in the following months. Options are financial derivatives that enable investors to speculate on or safeguard against price fluctuations. Call options are used to capitalize on price increases, whereas put options offer protection against price declines.

As observed on Wednesday, the one-week call-put skew for Ether, which measures the demand for call options in comparison to put options expiring in a week, dropped to nearly -8, the lowest it has been in over three months. This shift suggests a stronger market preference for positions anticipating a decrease in Ether’s price. This negative sentiment persists across one, two, and three-month skews.

Market

Market experts note that the higher interest in put options for Ether arises from ETH’s fall below key support levels and the strategy of selling call options to generate additional income. Imran Lakha, the founder of Options Insights, commented in a Deribit blog post that the recent uptick in ETH skew reflects the impact of call selling and the break of crucial technical support around $2,400, driving prices toward $2,200. Lakha emphasized that a decisive level for ETH is $2,150; falling below this could trigger further price declines. He also highlighted the current market trend indicating a need for short-term caution for ETH, with a growing demand for protective measures.

At the time of reporting, Ether was trading at $2,210, marking a 1% decrease for the day, as per CoinDesk’s data.