An analysis of Ethereum Options at Deribit, a crypto derivatives trading platform, reveals that the trading community expects ETH prices to tank in days ahead.
A tweet from Skew, a real-time crypto market analytics platform, shows that a majority of Ethereum Options traders are bearish, and that there is a one-way flow of bearish positions as the number of Call_Sells outstrip Call_Buys, at 93% and 3% respectively.
Overly, this shows that traders’, despite bullish sentiments from coin holders and influential developers, are jittery, and bearish against the expectation of the developer community who are upbeat, banking on on-chain development to spur a price ETH rebound from spot rates.
Call_Sells Indicative of Ethereum Bear Pressure
👀 #OneWayFlow pic.twitter.com/O2NLMLJyaU
— skew (@skewdotcom) December 11, 2019
Clearly, the prevailing sentiment is bearish and there are many traders waiting to buy ETH for cheap. That explains the high number of Call_Sells.
Call_Sells, unlike Call_Buys, is a bearish signal and occurs when the number of bulls, though upbeat, are bearish in the immediate term. 1,200 such positions were placed at Deribit as shown in the screenshot. For that specific reason, they place bets to buy the coin at lower prices.
In contrast, there were just 44 Call_Buys meaning the number of traders expecting ETH prices to surge over the short-term was fewer than the herd. According to an analyst, Call_Sells point to price weakness:
“it means that the most taker positions are people wanting to sell calls, this taking a bearish bias on the market (call is an option to buy so if you’re selling that you’re actually hoping for prices to be lower).”
Deribit Responding to Clients’ Demand
In Q1 2019, the Dutch-based derivatives trading platform launched Ethereum Options for the first time allowing the trading of European Style, Vanilla options.
A Vanilla Option has no specific feature but like any other Options contract, it gives the owner the right, not an obligation, to buy or sell the underlying within a specific time frame at a pre-determined price.
Institutions use derivatives like Bitcoin Futures and Options for risk management and to hedge their portfolios. Responding to user demand, the CEO and founder of Deribit, John Jansen, said many OTC desks and customers were eager to see the launch of ETH options.
ETH Route to $130?
At spot rates, ETH is dangling precariously at $144. However, it remains to be seen whether prices will fall below the immediate support line at $130 and later $100 as mentioned in previous ETH/USD price analyses.
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