Buy on dips and profit in the medium term, a strategy that is applied in most economic sectors. So is the drive for that fall to occur. In this case, we have some data showing how those who bought ETH in its dip below $ 1,600 are gaining right now, but also not necessarily driving it. The gains were still held despite yesterday’s ETH options expiration.
There was certainly a considerable drop in the price of ETH on March 24, but it rebounded. It went from being at US $ 1,550 to surpass US $ 1,800. However, we also recognize that when Ethereum options are about to expire there can always be a pullback in price. However, on this occasion, the whales and traders who bought ETH in the fall reduced their positions during the last hours and with it they even managed to make a profit. The move continued even after the options expired.
What factors could have influenced traders to close their long-term ETH contracts after the options expired?
The $ 1.15 billion Ethereum options expired yesterday, but the ETH price was relatively stable at $ 1,630 at expiration. This event may have been influenced by the continuous increase in gas rates for Ethereum transactions.
But in order to better understand these events, it is necessary to find clues or evidence that the main traders reverse the previous price pressure. If that is not the case, then there should be no reason to believe that the recent liquidation was related to the expiration of the options.
In short, it appears that traders did not change their attitude after the options expired. The major exchanges show the net positioning of the long-to-short contract relationship. This indicator is calculated by analyzing the client’s consolidated position in spot, perpetual and futures contracts. Therefore, it offers a clearer view of whether professional traders are leaning higher or lower.
In these cases, it is always relevant to underline that there are occasional methodological discrepancies between these platforms. Therefore, what is recommended is to monitor the changes rather than the absolute numbers. The 1.56 ratio favoring longs on OKEx was the highest level seen in March. This indicates that the main traders were confident that the support of US $ 1,550 would be maintained.. Since this move took place 36 hours before the options expired, the thesis that the whales pushed the price of ETH lower to make a profit is weakened.
The option-induced price drop theory is disproved in a CoinMetrics report. This report concluded that the EIP-1559 network upgrade is unlikely to solve the problem of high gas costs. The report mentions that only scalability solutions could really fix the problem. Therefore, major traders would have bigger issues to worry about, pushing the price of Ether regardless of the expiration date.
According to CoinTelegraph, “A similar trend took place in Huobi, where the net long-to-short ratio of major traders peaked at 0.96 on March 25.” This favored shorts slightly, but the indicator had not seen such levels since March 7. Therefore, “it is denoted that there was no selling pressure pointing to the expiration of the options on March 26”.
In this case, we must consider that there could only be a rally towards all-time highs on a sustained basis if the changes mentioned by CoinMetrics in their study are implemented. Yes, scalability. The future of the ETH price is closely linked to the progress of the Eth2 update, and we do not deny that it also depends on the activity of traders. However, this time the fall was not pushed on purpose.