Despite a pause in the rally, options traders remain optimistic about the price prospects of the second-largest cryptocurrency by market capitalization. This was reported by CoinDesk analyst Omkar Godbole, citing Glassnode.
According to data from the derivatives exchange Deribit, the put/call ratio for Ethereum options across all expiration dates has reached 0.61. This, according to the expert, is the highest level “in at least a year.”
“The put/call ratio has reached 0.6, indicating a bullish outlook following the approval of the ETH-ETF,” noted representatives of the algorithmic trading firm Wintermute.
Godbole warned that excessively high values of the ratio (1 and above) could indicate an overheated market and an approaching peak of the rally. Conversely, low values like 0.2 are a sign of “extremely bearish sentiment.”
A put option gives the buyer the right to sell the underlying asset at a specified price by a certain date. Experienced market participants typically use such derivatives to hedge spot positions and generate additional profits. Thus, a high proportion of put options may also be linked to investors’ desire to protect their assets from sudden price drops.
On May 23, the U.S. Securities and Exchange Commission approved 19b-4 applications from issuers of spot exchange-traded funds based on Ethereum.
The companies that received approval include VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK Invest/21Shares, Invesco/Galaxy, and Bitwise.
Trading will commence once the SEC signs off on the registration statements on Form S-1.
Previously, DeFiance Capital founder and CEO Arthur Cheong suggested that the price of the second-largest cryptocurrency could rise to $4500 even before the launch of spot exchange-traded funds.
Earlier, analysts at QCP Capital pointed to the dominance of calls in the open interest of Ethereum options.