ETH Contracts Expiration may Affect its Market

Steve Anderrson
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain. Join the official channel of thecoinrepublic, For the latest news updates: https://t.me/thecoinrepublic
  • Ethereum has been rallying for a long time now and held its position as the top altcoin in the industry.
  • The ETH token is trading at $396.19 and is up by almost 3.30% in the last 24 hours.
  • The indicator tends to move to a negative zone when generally calls are more costlier than puts.

The second largest cryptocurrency platform, Ethereum has been rallying for a long time now and held its position as the top altcoin in the industry. Currently, the ETH token is trading at $396.19 and is up by almost 3.30% in the last 24 hours. Few days ago, the price spike above the $400 levels marking an intraweek high of $408.8. Even its correlation with Bitcoin experienced an all time high. Ethereum has been doing its best to manage its growth along with Bitcoin, however unfortunately it faced  heavy pressure as a huge amount of ETH contracts were scheduled to expire on 28th of August. 

Open Interest on ETH Contracts Increase Five Folds

ETH Open contracts worth $112 million expired the other day. ETH’s Open Interest (OI) may not match the spectrum of the BTC contracts which stand at a total of $1.9 billion. However, over the last few months we have seen some exploding open interest of ETH contracts. In fact, in just a period of 3 months the ETH Options market has multiplied by five times and currently stands at $452 million. 

Growing Bearish Pressure on the ETH Market

However, the expiration of an enormous amount of ETH contracts can influence the price of the asset. The  Call-Put ratio at the time of writing (0.84) suggested that the investors were in favour of buying Put rather than Calls. However, this implied the growing bearish pressure as ETH investors anticipated that the market may lower to some extent in case of a sell-off. 

Skew Indicator Suggests That Investors Seem Cautious

However, the recent 25 day Skew data suggests that indicator is slightly bearish. The indicator tends to move to a negative zone when generally calls are more costlier than puts. In simple words, if the indicator is in a negative zone it implies a neutral or bullish market and if the indicator it implies a bearish market. For ETH, the indicator generally swings between the -20% and 20% portion. The Skew graph implies that the price of puts seem to be rising compared to that of the calls. 

Current investor scenarios suggest that they are being very cautious about their holdings, which may be due to the recent expiration of Ethereum contracts. However, it is very difficult to predict the direction of Ethereum’s market as the large expiry of the contracts may steer the price in any direction.

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