Deribit Ethereum (ETH) options contracts with a strike price of $2,550 will expire on Friday. There are over 24,600 outstanding contracts worth over $62 million at this price, even though the price of ETH is $2,541.79 before an exchange-traded fund (ETFs) deadline for approval in May.
The large volume of contracts appears to reflect market sentiments regarding the potential approval of ETFs that directly track the price of ETH.
ETH ETFs may not live up to expectations
The market expects the price of ETH to rise to $2,900 on March 29, 2023, and to $5,000 by June, following the first wave of ETF approvals expected in May 2024. A call option gives the contract holder the right, but not the obligation, to purchase an underlying asset on or before the contract’s expiration date.
Call options on ETH futures | Source: Deribit
Read more: An introduction to crypto options trading
Before the US Securities and Exchange Commission (SEC) approved Bitcoin spot ETFs last week, Ethereum investment products saw a good inflow of funds. Corporate products saw inflows of $29 million in the first week of January.
Bullish signs for the network include progress in scalability and the push towards cheaper transactions made possible by proto-danksharding. Meanwhile, several so-called rollups, blockchains that expand Ethereum’s throughput, are set to grow in diversity and number in 2024.
In October, ETH futures ETFs launched to a lackluster reception, taking in just $6.6 million on the first day. In comparison, the ProShares Bitcoin Strategy ETF saw inflows of $1 billion in its first two days.
ETH price bullish for the medium term
Some commentators believe that markets are exaggerating in predicting excessively bullish prices for Ethereum. However, some, like QCP Capital, expect ETH to outperform Bitcoin in the medium term.
“We expect ETH to continue to outperform BTC over the medium term as the narrative turns towards potential ETH Spot ETF approvals.”
But the SEC’s approval of an Ethereum spot ETF is not just a formality. As a network, Ethereum is arguably more centralized than Bitcoin and offers staking returns that could be considered securities. Last year, the SEC sued cryptocurrency exchange Kraken for providing its staking product as an unregistered security to US investors.
Read more: Cryptocurrency Staking: How to Stake Coins and Increase Your Income
Bitcoin bull Michael Saylor said that ETH is a security because some core developers can change its properties. On the other hand, people want to maintain the same properties as Bitcoin.
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