Ethereum
Why Ethereum Derivatives Traders Deploy an Iron Condor Strategy
Ethereum fell to $3,480, a 3% decline in the last 24 hours. Wintermute traders said Decrypt that ETH appears to be in a range between $3,200 and $3,400 as derivatives traders are likely taking advantage of an Iron Condor strategy. The company added that Bitcoin is also in a range between $63,000 and $65,000.
“The market consensus is that these areas are important like ‘lines in the sand,’” an analyst on the firm’s trading desk told Decrypt, “and I see traders relying on them to define risk “.
A Iron Condor is a direction-neutral options strategy in which traders benefit from the underlying asset remaining range-bound until the options expire.
This is a relatively low-risk strategy that is suitable for traders who expect low market volatility. Ethereum Price. But since it involves buying and selling four different options contracts with the same expiration date, it requires precise timing to achieve this.
Wintermute analysts highlighted that price range is an important area for derivatives traders, and a major swing in one direction or the other could have a huge impact on the price of ETH.
Ethereum open interest fell to $11.5 billion this week, indicating that traders believe significant price swings for the asset are unlikely. It’s for the short term. But there are signs that traders are expecting a bullish move in the coming months.
Analysts noted that yesterday a large trader purchased Ethereum options with a strike price of $4,000 while paying a premium of $12,054,100. The expiration date for these options contracts is September 27. The trader could potentially profit around $107 million if ETH sees a recovery, especially if it crosses the $4,000 mark.
The expiration date of these contracts is important as the Chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, said that the Ethereum spot ETFs in the United States would go live during this period. summer.
Options contracts expiring between June 28 and July 5 experienced a 6-8% increase in their implied volatility (IV). A higher IV indicates that purchasing options contracts is more expensive and presents greater risk to the buyer. Additionally, these contracts are likely being purchased in anticipation of SEC comments regarding Ethereum spot ETFs in the United States.
Ethereum saw some major positive developments during the week.
In the last 24 hours, Bitwise released a TV advertising for Ethereum before spot ETFs. The company created the video as an NFT on the Ethereum blockchain.
Earlier this week, Ethereum lead developer Consensys announcement that the SEC had closed its investigation into Ethereum 2.0 without filing a complaint.
There are also signs that even without an Ethereum ETF trading start date, institutional demand is starting to pick up steam.
Pantera Capital Management LP plans to invest 100 million dollars in the Bitwise Ethereum ETF, the issuer said in an SEC filing. A report based on data from research firm K33 indicates that Ethereum ETFs could potentially attract 4 billion dollars collection within five months of their launch.
Edited by Stacy Elliott.