The state of Ethereum’s options contracts shows that traders expect the digital currency to rise in price to $ 880 in the next four weeks.
To Report Coin Telegraph, Ethereum prices have risen 88 percent since November. This performance has surprised even the most optimistic Ethereum traders. Ethereum prices hit a 2020 high ($ 750) during this period.
Significant growth in the value of locked Ethereums in DeFi protocols is one of the main factors in the growth of Ethereum prices. On the other hand, the Chicago Mercantile Exchange (CME) has announced that it will offer Ethereum futures contracts from February 8 (February 8).
The above data show that investors are now more confident in Ethereum 2.0 and its success, despite the delays in launching Ethereum Update.
Miner inventory and reaching its lowest level in the last 2 years is another upward factor in the Ethereum market. This reduces the likelihood of increased sales in the market and paves the way for price jumps.
Ethereum has increased 150 percent over the past three months to $ 880 million. This coincided with the breaking of the $ 700 resistance and caused it to reach its highest level since May 2018.
The ratio of selling to buying is ascending
By estimating that the scales in the option markets weigh heavily towards the call option (Call) or the put option (Put), it is possible to understand the state of emotions in the market. In general, buy contracts are considered an uptrend, and conversely, sell contracts are a downtrend.
Despite the recent price spike in Ethereum, the sell-to-buy ratio has fallen sharply; This means that the number of purchase contracts, which is an upward factor, has increased. In another scenario, whenever traders withdraw their profits or prepare for a possible fall, traders can expect the price to fall.
Two weeks ago, the ratio was in the range of 0.94, which indicates that the sale-to-purchase contracts were in the balanced range.
20% chance of jumping to $ 880
The probability of reaching an agreed price in option trades at a given time is calculated using the Black & Scholes model. The Deribit Exchange publishes this data delta. Delta is actually a percentage of the probability of reaching an agreed price.
According to the above data, the agreed price of $ 880 with a maturity date of January 25, has a 34% probability of realization. However, reaching a deal price of $ 960, based on this model, has a 25% probability.
As can be seen from the table above, the data is somewhat conservative. For example, a deal price of $ 720 has a 59% probability.
Contracts are rising sharply with the March maturity
There are 86 days left until the March 2021 contracts expire. However, the price of Ethereum is likely to reach $ 880 by then.
According to the Black & Scholes model, this price is currently 49% likely. On the other hand, a deal price of $ 1,120 has a 33% probability.
As can be seen in the chart above, the trading volume of these contracts is at an acceptable level and each contract is priced at $ 114. These data indicate positive emotions in the market.
Upward situation of futures market
One of the best tools for estimating the state of professional traders’ feelings about a market is to look at premiums in the futures market. The premium is obtained by calculating the difference between the price of longer-term futures and the current price of Ethereum.
The chart above shows that the index was in the range of 5.8 percent on December 19 and reached this range again three days ago. November 28 was the day Ethereum prices hit a multi-year high. When the value of futures contracts is above 3.5%, it indicates that the sentiment in the market is bullish.
The surplus is currently at 4.3%, which represents an annual surplus of 18%. This percentage is much higher than we have seen in recent months. Based on these data, it can be said that despite reaching $ 750, professional investors are still hoping for more Ethereum leaps in the future.
It may be a little early to say when the sentiment in the derivatives markets will decline, but buyers and market cows now have full control over the fluctuations.
It should not be forgotten that the price of Ethereum may change at any moment, but this correction is not strong enough to create chaos.