The Data for Ethereum Options Suggests that $2K Will Remain an Out-Of-Reach Target

On August 26, $1.27 billion worth of Ethereum option contracts will come to an end. The price is expected to stay depressed at $2,000 until the Merge. Since Ether (ETH) price failed to surpass the $2,000 mark, it has suffered a 16.8% loss; however, this was not enough for bears to gain a foothold in the market during the August options expiration period.

Although the long-term effects are unknown, temporarily, Ether prices were impacted positively by the announcement of a tentative date for Merge migration from an Ethereum developers call on July 14. Influencer and technical analyst Crypto Rover said that because traders would be unwinding their positions, Ether would “drop so hard on the day of the merge.”

It’s also certain that leveraged Ether purchasers were not anticipating the sharp decline on August 18, when data from Coinglass shows $208 million in contracts liquidated at derivatives exchanges.

Bears placed their bets below $1,600 The open interest for Ether’s July monthly options expiration is $1.27 billion, but the actual amount will be lower owing to bearish optimism following ETH’s price fall between August 20 and 22. Breaking above that resistance surprised bears because just 17 percent of the put (sell) options for Aug. 26 have been bought above that price level.

The 1.18 call-to-put ratio indicates the $685 million call (buy) open interest is stronger than the $585 million put (sell) options. Even so, as Ether stands near $1,650, most of these bearish bets will become valueless. If Ether’s price stays above $1,600 at 8:00 am UTC on Aug. 26, only $95 million put (sell) options will be expired. This occurs because a right to sell Ethereum at $1,600 or lower isn’t worth anything if Ethereum trades above that point upon expiry

The August expiration is typically dominated by the bulls. In this crude estimate, only put options used in bearish bets and call options utilized in neutral-to-bullish transactions are considered. Even so, this simplification ignores more complicated investment tactics. For example, a trader may have sold a put option to gain positive exposure to Ether above a particular price, but there is no easy way to calculate this impact.

Bears and bulls are struggling for control of Ethereum’s price around $1,600. If the bears can push the prices below this key level, they could stand to gain about $150 million. However, if the bulls can keep prices above $1,600, they could also profit by about the same amount. Considering how much money has been lost by traders on both sides recently (about $270 million), it is unlikely that either side will have enough clout to move ETH significantly in one direction or another before August options expire.

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