Derivatives of ether (ETH) are growing, as major traders increasingly speculate on the transition from proof-of-work (PoW) to proof-of-stake (PoS) on the Ethereum.
The aggregate open interest of options ether at the largest exchanges, it went from US$2.74 billion on July 2nd to more than US$7 billion on July 29th. That metric is currently $5.9 billion. Open interest indicates the value of all outstanding contracts that still need to be settled.
The aggregate open interest in futures of ether reached $7.58 billion on July 30 – a significant increase from the $4.71 billion recorded on July 2.
Head of derivatives at Genesis Global Trading Joshua Lim told The Block that the surge in activity is linked to macro hedge funds positioning themselves ahead of “The Merge.” This term refers to the transition of the network Ethereum from PoW to PoS.
Second largest cryptocurrency on the market, ether saw its price soar before The Merge, with the price skyrocketing 59% in the last month. The Merge is expected take place on September 19as reported by network developers.
“A more recent phenomenon has been the popularity of low premium option structures in ETH from multi-discretionary hedge fund placement to The Merge,” Lim wrote.
“A common structure might be a call butterfly, which is worth thinking about if ETH/USD ends December 2022 at around $3,000 spot price. These longer expiry structures are inflating open interest in long term options. ETH”, he added.
These strategies are more complex and require traders to trade more derivatives, which impacts volumes and open interest. The so-called “call butterfly”, for example, involves two short-term options and twice the number of a long-term option.
The aggregate open interest in options ether is greater than aggregate open interest in stock options markets. bitcoin (BTC)this being US$ 5.1 billion.
The activity in the derivatives market of ether is higher, due to the more bullish bitcoin derivatives market, which has seen the ratio of spot trading volume to futures volume increase.
This indicates that activity in bitcoin trading has shifted to trading the underlying asset versus futures.
The opposite phenomenon is happening with ether.
Money Times is Top 9 in Investments!
Thanks for your vote! Thanks to you, Money Times is among the 9 largest Brazilian initiatives in the Digital Universe in Investments. If you rely on the site’s content to take good care of your money, keep voting and help Money Times become the best investment news portal in Brazil. We count on your support. CLICK HERE AND VOTE!
Disclaimer
O money times publishes informative articles of a journalistic nature. This publication does not constitute an investment recommendation.
Source: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
