Ethereum derives hope of year-end rally from bullish options data

Investors are bullish on Ethereum options.
Investors are bullish on Ethereum options. Image from freepik

Key Takeaways:

  • Options trades betting a year-end rally for Ethereum are attracting increased investor interest.
  • Ethereum (ETH) prices continue to trend downwards.

NEW DELHI (CoinChapter.com) — Investors continue to be bullish for Ethereum (ETH) options trades that are betting on a year-end rally for the world’s largest altcoin.

Deribit, a crypto derivatives exchange accounting for most of the Ethereum (ETH) options market, shared data about bullish bets on ETH call options. In detail, a call option gives its buyer the right to buy the underlying asset at a specific price on or before a set date.

Call options with a strike price above the current price of the underlying asset are, in essence, a bet that the asset’s prices would move above the strike price before or by the expiry date. If the bet succeeds, the buyers will receive a large payout. However, if it fails, the money invested would be lost.

Deribits Insights shared the data on Twitter, highlighting a large fund invested $4 million on a bullish ETH bet that expires in Dec 2021. The call option estimates ETH to reach $4,200 to $4,400 before option expiry.

Moreover, the tweet also shared that an individual whale spent $2 million on a Jan expiring BTC call options with a $55,000 strike price.

Also Read: Ether Capital announces plans to stake $40M worth of Ethereum.

Additionally, Tony Stewart, Deribit’s options market analyst, stated the latest call purchases are ‘verified bullish plays,’ hinting at probable stronger support from buyers soon.

Furthermore, Zhu Su, CEO of Three Arrows Capital, also highlighted the bullishness in the Ethereum options market. 18,500 contracts for $4,400 call option and 14,000 contracts for $4,200 call options traded on the crypto-focused investment firm Paradigm.

Ethereum Price Charts

Ethereum prices have been moving along a descending trendline resistance since Dec 1. Monday morning saw $12.69 million worth of Ether futures liquidated after ETH prices fell by $100. Over 93% of the liquidations came from traders who borrowed exchanges to bet on higher ETH prices.

Ethereum prices have lost nearly 16% of their value in Dec. At present, the prime altcoin’s 26-day EMA line acts as immediate resistance near $4,099. If prices break above immediate resistance, ETH faces a challenge from its 50-day MA trendline near $4,300.

ETH price daily chart with RSI.
ETH price daily chart with RSI. Source: Tradingview.com

On the other hand, if the downside continues, Ethereum has support near $3,700. ETH has repeatedly tested the support level since Oct 14, rebounding every time. However, if prices move below immediate support, Ethereum prices could fall to nearly $3,500 before recovering.

Recommended: Ethereum bull market target is $4K-5K, Bloomberg analyst asserts.

Ethereum also has support from the $3,325 price level, from which ETH started its ATH bull run. Moreover, the 200-day MA line also acts as support near the $3,325 price level. The relative strength index is neutral for ETH, clocking 42.18 on the daily charts.

Meanwhile, trend-based momentum oscillator MACD continues to be bearish for Ethereum, but the bearishness seems to be weakening. Bars on the MACD histogram are contracting towards zero, which means the MACD line (difference between 12-day and 26-day EMA) is moving upwards towards its signal line (9-day EMA of MACD).

Ethereum price daily chart with MACD
Ethereum price daily chart with MACD. Source: Tradingview.com

Although interpreting options data is challenging, the weakening bearishness of MACD seems to indicate buyer interest in Ethereum is strong.

At the time of writing, ETH was changing hands at $3,929, up 0.11% on the day.

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Ethereum, Ethereum derives hope of year-end rally from bullish options data

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