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- Bitcoin (BTC) and Ether (ETH) reached their highest values in 12 days on Oct. 1, thanks to a 9.5 percent surge in the cryptocurrency market
- Service suspensions for Chinese citizens were issued by centralized crypto exchanges like Huobi and Binance, resulting in a massive outflow of currencies
- Despite the volatility, there are still reasons for investors to be positive about Ether towards the end of the year
Bitcoin (BTC) and Ether (ETH) reached their highest values in 12 days on Oct. 1, thanks to a 9.5 percent surge in the cryptocurrency market. The price increase has been ascribed to a number of factors, including the consumer price index in the United States, exchange supply shortages, and a bullish continuation chart pattern. Apart from investors recovering confidence after the September 19 dip was ascribed to contagion worries from China-based property developer Evergrande, traders are unlikely to find a reason for the rapid shift. Due to nonfungible token (NFT) sales and decentralized finance (DeFi) activities, the Ethereum network has been criticized for its $20 or more transaction prices.
The issue has been partially solved by cross-chain bridges linking Ethereum to proof-of-stake networks, and the introduction of the Umbrella network oracle service on Friday demonstrates how quickly interoperability is progressing. It’s also worth mentioning that China’s announcement of tighter restrictions last week boosted trading at decentralized exchanges (DEX).
Service suspensions for Chinese citizens were issued by centralized crypto exchanges like Huobi and Binance, resulting in a massive outflow of currencies. This raised movement on Uniswap and the decentralized derivatives market dYdX at the same time.
Despite the volatility, there are still reasons for investors to be positive about Ether towards the end of the year. At the same time, Ethereum’s layer-1 scaling constraints have led several of its competitors to make substantial advances during the last few months.
Notice how Ether’s three-month gain of 58 percent is substantially less than that of developing Proof-of-Stake (PoS) alternatives with smart contract capabilities and interoperability. The long condor with call options approach may be more ideal for optimistic traders who believe Ether price will break to the upside but are hesitant to confront the liquidation risks imposed by futures contracts.
Options markets provide you more freedom to create bespoke strategies, and there are two instruments to choose from. The call option protects the buyer against price increases on the upside, while the protective put option protects the buyer from price decreases on the downside. Traders can also sell derivatives to generate limitless negative exposure, similar to how a futures contract works. This long condor approach has a slightly positive range and is slated to expire on December 31. Other times or price ranges can be used with the same basic structure, however contract amounts may need to be adjusted.
When the pricing took place, Ether was trading at $3,300, but a comparable result may be obtained at any price level. To establish positive exposure over this price level, the initial strategy entails purchasing 0.50 contracts of $3,200 call options. The trader must then sell 0.42 ETH call option contracts to restrict profits over $3,840. Another 0.70 call option contract should be sold to further restrict profits over $5,000. If the price of Ether rises above $5,500, the trader will need to acquire 0.64 call option contracts to execute the strategy.
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.
