Ether price fell to $ 4,400 during the correction on Nov. 11, but data shows traders expect it to break through $ 5,000 soon.
Ether bulls appear to be in high spirits after hitting an all-time high (ATH) of $ 4,870 on November 10th. Although this is a new high in US dollars, it remains the low hit in the BTC pair in June 2017. Even so, ETH will likely still rise to the 0.155 BTC it hit in the previous cycle when the ICO was booming.
The success of the Ethereum network caused congestion and high fees, allowing competitors to get closer. For example, in mid-2017, Ethereum Classic (ETC) and NEM (XEM) were the main competitors, but they represented only 13% of Ether’s total market cap of $ 37 billion.
Currently, the combined market cap of Binance Coin (BNB) and Solana’s SOL is 32%, compared to Ethers’ $ 557 billion.
Currently, Ether is trading on an ascending channel with a target of $ 5,000, but the bears still seem to have reason to doubt the network’s ability to switch to Ethereum 2.0 by the end of the year.
ETH / USD price chart | Source: TradingView
This year, Ethereum’s top use case, DeFi, has caught the attention of regulators and is not a good thing. On November 9, SEC Commissioner Caroline Crenshaw published her opinion in an article entitled “Risks, Regulations, and Opportunities of DeFi.” In it, Crenshaw mentions that the sector lacks market protection and expresses concerns about anonymity and market manipulation.
On the flip side, the Total Value Locked (TVL) in smart contracts on the Ethereum network hit an ATH of $ 94 billion, a growth of 42% in three months. Regardless of the competition or the average $ 50 transaction fee, there is definitely growing demand for DeFi, NFT, Oracle, and decentralized markets.
TVL on the Ethereum network | Source: DeBank
Interestingly, despite the positive performance of Ether backed by strong usage indicators, bearish put options dominate today (Nov. 12) after expiring $ 700 million in ETH options.
Ether Options OI recap for November 12th | Source: Bybt
415M put options The 0.69 call-to-put ratio is not accurate as the recent rally is likely to nullify most bearish bets.
For example, if the price of Ether stays above $ 4,700 on November 12th at 3:00 p.m., those put options worth only $ 10 million will be available on the expiration date. The right to sell ether for $ 4,700 has no value if it trades above that price.
Bears can still push ethers below $ 4,600
Here are the four most likely scenarios considering current prices. In addition, the data shows how many contracts will be available today for both call and put options.
The imbalance in favor of each side represents the theoretical gain:
- From $ 4,500 to $ 4,600: 7,500 buy orders vs. 13,600 sell orders. The net result speaks in favor of an additional put option of $ 25 million (bear).
- From $ 4,600 to $ 4,700: 12,700 buy orders vs. 7,300 sell orders. The net result is $ 25 million in favor of call options (bulls).
- From $ 4,700 to $ 4,800: 17,300 buy orders vs. 2,100 sell orders. The net result is $ 75 million in favor of call options (bulls).
- Over $ 4,800: 24,300 buy orders vs. 100 sell orders. The net result was complete dominance by the bulls, with profits totaling $ 115 million.
This rough estimate looks at calls used in bullish bets and puts specifically for neutral to bearish trades. This simplification does not imply any more complex investment strategies.
Ether price could go up again, but $ 5,000 is still the target
If the Ether price is above $ 4,800 when the option expires, the cops will raise $ 115 million. With that in mind, the loss of $ 25 million to the bears should be viewed as a gain.
There is still a chance for the bears to avoid losses this afternoon by pushing Ether price below $ 4,600, a 3% decrease from its current $ 4,750.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
Mr. TeacherAccording to Cointelegraph