Why Ether Price Is Improving
The surge in Ethereum price has been primarily driven by a cut in US Federal Reserve interest rates, signaling a shift towards a more accommodative monetary policy. Consequently, the S&P 500 index reached an all-time high on September 24. Additionally, a drop in the S&P Global Manufacturing PMI on September 23 heightened investor concerns about the health of the economy, prompting a flight to safety.
As a result, yields on the US 2-year Treasury bond fell to their lowest level in 24 months, as investors sought the relative safety of government-backed assets. This market fear of an impending recession has benefited cryptocurrencies like Ether, which investors view as scarce assets.
However, from a broader perspective, Ether is down 33% over the last four months. This decline followed the highly anticipated US launch of a spot exchange-traded fund (ETF), which ultimately disappointed, leading to $684 million in outflows, according to data from Farside Investors.
Options Market Overview
The upcoming options expiry features a total of $2.77 billion in open interest, comprised of $1.82 billion in call (buy) options and $0.95 billion in put (sell) options. While bulls seem to have the upper hand, with $1.47 billion of call options targeting prices of $2,700 or higher, these positions will expire worthless if Ether remains below that level by September 27. Consequently, even with fewer put options, bears still have the opportunity to shift the balance in their favor.
Transaction Activity and Fees
As Ether’s price gains momentum, the demand for its smart contract processing capabilities has also increased. The number of transactions on the Ethereum network rose by 15% in the seven days leading up to September 24, pushing the average transaction fee to over $4.50, up from $1.45 just ten days earlier.
Additionally, increased Ether issuance has contributed to the asset’s struggle to reclaim the $3,000 level. According to data from Ultrasound Money, a total of 58,856.4 ETH has been added to the supply over the past 30 days, representing a 0.6% annualized inflation rate. These factors have raised concerns among investors that Ether’s upside potential may be constrained, especially with competition from platforms like Solana and BNB Chain, both offering transaction costs that are over 20 times lower.
Bears Positioned for Options Expiry
In this environment, traders believe that Ether bulls must prevail in the upcoming options expiry to have a chance of pushing the price back toward the $3,000 mark. Below are the four most likely scenarios based on current Ether price trends, including the potential impact of call and put options for the September 27 expiration:
- Between $2,400 and $2,500: The outcome would favor put options by $225 million.
- Between $2,500 and $2,600: This result would favor put options by $100 million.
- Between $2,600 and $2,700: The balance shifts, with call options gaining an advantage of about $70 million.
- Between $2,700 and $2,800: This scenario favors call options, with a net result of $220 million in their favor.
In essence, Ether bulls’ best chance to secure a meaningful advantage is by pushing the price above $2,700 on September 27. However, the path for put options to lock in a $100 million advantage appears clearer, as the current $2,600 support level continues to be tested.
Conclusion
As Ether approaches the pivotal options expiry, the market dynamics remain fluid. With a combination of macroeconomic influences and rising transaction activity, traders are keenly watching how Ether will perform in the coming days. The ability of Ether to break through key resistance levels and maintain bullish momentum could significantly influence its price trajectory in the near future.
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