Ether tests $1,200, but is better positioned for a $1.13 billion options expiration on Nov. 19. 25

It doesn’t matter whether you analyze the long-term or weekly time frame of Ether (ETH), there is little hope for the bulls. In addition to the negative performance of 69% since the beginning of the year, a descending channel has pressed the price of ETH offering resistance at $1,200.

Ether/USD price index at 4 hours. Source: TradingView

Regulatory uncertainty continues to weigh on the industry. For example, Starling, a UK-based digital bank, announced on Nov. 19. 22 which would no longer allow customers to send or receive money from digital asset exchanges or merchants. The bank described the cryptocurrencies as “high risk and heavily used for criminal purposes”.

Other worrying news for the Ethereum ecosystem involved decentralized finance (DeFi) platform AAVE, which suffered a short-selling attack on Nov. 19. 22 aimed to profit from undersecured loans.

Curiously, a similar exploit occurred on Mango Markets’ DeFi application in October. While not a direct attack on the Ethereum network, the attacker has exhibited critical flaws in some major decentralized collateral lending applications.

Singapore-based cryptocurrency lender Hodlnaut is also reportedly facing a police investigation over allegations of cheating and fraud. The problems started on Aug. 10, 8 after the loan company cited a cash crunch and suspended withdrawals on the platform.

Finally, on Nov. On Feb. 22, US Senator Elizabeth Warren linked the demise of the FTX exchange to 2008 subprime mortgages and penny stocks used for pump-and-dump schemes. Warren said the FTX crash should be a “wakeup call” for regulators to enforce laws on the cryptocurrency industry.

This is why the $1.13 billion Ether monthly options expire on November 19th. Sept. 25 will put a lot of pressure on prices on the bulls, even though ETH posted gains of 11% Nov. 25-25. 22-24.

Most of the bullish bets have been placed above $1,400

Ether rallied towards the $1,650 resistance on Nov. 19. 5 gave the bulls the signal to expect a continuation of the uptrend. This becomes apparent because only 17% of call (buy) options for November 10th. 25 were placed under $1,400. As a result, Ether bears are better positioned for the monthly expiration of the upcoming $1.13 billion options.

Ether options aggregate open interest for Nov. 19, 25. Source: CoinGlass

A broader view using the call-to-put ratio of 1.44 shows a skewed situation with bullish (call) open interest bets at $665 million versus $460 million put (sell) options. However, with Ether currently hovering around $1,200, bears are in a dominant position.

For example, if the price of Ether stays below $1,250 at 8:00 UTC on November 29. 25, only $40 million of these call (buy) options will be available. This difference occurs because the right to buy Ether at $1,250 or $1,500 if it trades below that level at expiration is not worthwhile.

The bears could pocket a profit of $215 million

Below are the four most likely scenarios based on the current price movement. The number of option contracts available on Nov. 10 25 for calls (bullish) and puts (bearish) instruments varies depending on the expiry price. The imbalance in favor of each side constitutes the theoretical profit:

  • Between $1,050 and $1,150: 800 calls vs. 20,200 puts. The net result favors the bears by $215 million.
  • Between $1,150 and $1,250: 3,300 calls vs. 15,100 puts. The net result favors bearish bets by $140 million.
  • Between $1,250 and $1,300: 4,700 calls vs. 13,200 putts. The net result favors the bears by $100 million.
  • Between $1,300 and $1,400: 8,700 calls vs. 8,900 puts. The net result is balanced between bulls and bears.

This rough estimate considers call options used in bullish bets and put options only in neutral to bearish trades. Even so, this oversimplification ignores more complex investment strategies.

A 7-year dormant Bitcoin wallet could complicate things for Ether bulls

Ether bulls need to push the price above $1,300 on Nov. 19. 25 to balance the scales and avoid a potential loss of $215 million. However, Ether bulls look out of luck as a Bitcoin wallet related to the Mt. Gox hack moved 10,000 BTC on Nov. 19. 23.

Ki Young Ju, the co-founder of blockchain analytics firm Cryptoquant, verified the findings, noting that 0.6% of funds were sent to exchanges and could represent sell-side liquidity.

If the bears dominate the November ETH monthly options expiration, that will likely add firepower for more downside bets. Therefore, at the moment, there is no indication that the bulls can turn the tables and avoid the pressure of the two-week descending triangle.

The views, thoughts and opinions expressed herein are those of the authors only and do not necessarily reflect or represent the views and opinions of Cointelegraph.