Cryptocurrency Derivatives Series: Ethereum On Verge Of 2Y Highs – FxWirePro’s Hedges Safeguard Upside Risks

Ethereum’s price action has been commendable in the recent times, ether’s price (ETHUSD) has surged commendably (especially for this week, 53.83% jump in the last month and 12.44% so far in this month) and it has been predicted upfront by our Econotimes hedging team and the suitable hedging strategy (long hedges) has also been advocated accordingly. Now, the underlying price movement is edging higher towards $400 trajectory, the rest is history.

The open interest data of Ethereum options contracts is surged by 5 times over the past three months to reach $344 million.

The second-largest cryptocurrency by market capitalization, ether (ETHUSD at Coinbase) has made recent highs of $415 and is currently trading at around $390 levels.

Technically, the minor trend spikes well above 7, 21 & 100-DMAs, but halts on shooting star formation and mild overbought pressure.

But RSI shows divergence to indicate more rallies are on the cards. Prior to which the intermediate trend takes-off rallies above EMAs upon the test of strong support zone at $88 – $110 levels.

Overall, extension of rallies seems most likely as it manages to breakout the stiff resistance level 9weekly plotting), while both leading oscillators (RSI & stochastic curves) signal intensified buying momentum.

Fundamentally, such massive rally is driven by the mounting adoption of DeFi applications as stated in our recent write-up. 

Hence, the confluence of various fundamental and technical driving forces indicate the further upside prospects of ether.

We activated the longs in ETHUSD futures contracts of July & August month deliveries, and these positions are well positioned to function as desired so far.

Another significant derivatives indicator (put/call ratio) is also signalling bearish open interest (OI) below 0.4 which is much lower than call options (bullish). As you could observe OI by strikes has risen considerably for $400 levels which is again an indication of bullish pressures.

Hence, we, now, wish to uphold the long hedges by rolling over September month deliveries with an objective of participating in prevailing uptrend. The investors are galloping into options markets in the recent times, leading Ether’s open interest to a record-highs nearing to $344 million.

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