ETH Options Showing Bearish Trend Following Shanghai Upgrade: Will Prices Drop?

In the Brief:

  • Ether options imply a negative bias towards its prices with a focus on put options over bullish calls.
  • The Shanghai upgrade may cause stakers to liquidate their tokens and drop prices.
  • Bitget has a $100 million fund for Web3's adoption.
  • A SushiSwap exploit caused a user to lose $3.3 million.
  • A Federal Reserve rate hike next month may affect crypto asset prices, with markets betting on a 63.4% chance.

3 - 5 minute read

The latest news in the crypto market suggests an imbalance in bearish and bullish Ether options. The Ether options call-put skew displays a higher preference for put options as compared to bullish calls both in the short-term and long-term trading. This implies a negative bias towards Ether’s prices, especially after Ethereum’s Shanghai upgrade on Wednesday. The upgrade opens up more than 18 million ETH staked in the Beacon Chain since December 2020, and analysts predict that some stakers might liquidate their tokens, causing prices to drop further.

Galaxy Digital predicts that 553,650 ETH might be sold over seven days following the upgrade, amounting to a per-day selling pressure equivalent to just 1% of Ether’s daily trading volume. This estimated selling pressure may cause a big negative impact on the cryptocurrency’s price. Ether traded up 1.4% at $1,860 early Monday.

Crypto derivatives trading platform Bitget announced a $100 million Asia-focused Web3 fund on Monday, validating the narrative that the next wave of blockchain development will come from the East. The launch of the new fund is part of the exchange’s “go beyond derivative” strategy aimed at driving crypto and Web3’s adoption, according to Gracy Chen, Bitget’s managing director.

Despite the crypto market’s steady recovery from the 2022 crash, security issues continue to plague the industry. Decentralized exchange SushiSwap fell victim to an exploit that involved the ‘RouterProcessor2’ contract used for trade routing on the exchange. The attack caused a loss of over $3.3 million to a single user, @0xsifu, a popular pseudonymous trader in Crypto Twitter circles. This incident has caused the SUSHI token price to remain volatile, clocking a high and low of $1.13 and $1.06, respectively. At press time, the token traded near $1.10, up 2.6% in the past 24 hours.

The US economy’s job report has raised market bets on whether the Federal Reserve will increase rates next month. Markets are pricing in a 63.4% chance of a 25 basis-point rate hike, according to the CME FedWatch tool. This increase in interest rate odds might put a floor under the dollar index and cap gains in risky assets, including cryptocurrencies.

In conclusion, the latest Ether options updates have shown bearish tendencies, which can cause prices to further decline. Decentralized exchanges continue to face security challenges, and there might be a chance of Federal Reserve rate hikes shortly, which may affect crypto assets’ prices. Traders should keep abreast of these developments to make informed decisions about their investments.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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