Spot Ethereum ETFs are Live: Here’s Why Options Traders Are Cautiously Optimistic

Spot Ethereum ETFs will begin trading today, but options traders are skeptical that ETH prices will spike above local resistance levels.

In two months, the regulatory perception of Ethereum has rapidly changed.

First, there were rumors that the United States SEC was investigating the Ethereum Foundation, and its chair, Gary Gensler, had been convinced that ETH was an unregistered security.

This position was a huge blow for ETH. There were all signs that the markets were on the brink. Prices were stuck in a range, retesting $2,800 before last May 2024.

Then, in the third week of May, and perhaps with politics in the equation, the United States SEC began accelerating the approval of 194-b forms. This decision was a game-changer.

Spot Ethereum ETFs To Begin Trading Today

Fast-forward two months, and the first spot, Ethereum ETFs, will begin trading in the United States today.

The CBOE earlier confirmed that several spot Ethereum ETFs would begin trading on July 23.

ETH ETFs are getting listing approvals today.

Tomorrow will be good day for Ethereum. pic.twitter.com/zvWihipNZ8

— JC (@delzennejc) July 22, 2024

Yesterday, the NYSE approved the listing and trading of two spot Ethereum ETFs from Grayscale and Bitwise today.

These derivative products also mean that Bitcoin investors can consider getting exposure to ETH through a legal, low-fee channel without worrying about custody.

As we know, custody can be a big challenge, especially if billions are involved, and we are aware that any simple blunder can lead to irreversible losses.

ETH believers say the coin could float to as high as $5,000 and reclaim all-time highs in the coming months. The push higher would be due to institutional investors funneling billions into the asset, just like we saw in Bitcoin.

DISCOVER: How to Buy Ethereum – Full Guide July 2024

Ethereum Traders Expect Volatility To Spike With ETH ETF Launch

However, before then, there are concerns. According to Deribit data, options traders expect high volatility in the coming days.

In the past week, interest in ETH options has increased, meaning traders expect volatility to spike.

(Source)

So far, ETH implied volatility, which traders use to gauge market volatility, is up from 56% to 70% within a week.

At the same time, some are expecting ETH prices to cool off before bouncing higher, following Bitcoin’s pattern in January.

Thus far, the put-call ratio is high, rising at one point to 1.45, meaning that traders are hedging their positions against potential price declines in the short term.

Traders Bullish, But Here’s Why ETH Price Must Breach $3,500

Even as the put-call ratio rises, traders are upbeat since there is a heavy concentration of open interest at around the $3,700 strike price by July 26.

This positioning shows that most ETH traders expect prices to breach above $3,500 and close above $3,700, a critical resistance level.

Thus far, parallel data from IntoTheBlock shows that buyers must first breach $3,500 for the upward momentum to develop, thrusting the coin to 2024 highs.

(Source)

According to IntoTheBlock, over three million addresses bought ETH at $3,547. These holders are underwater at spot rates, causing jitters, especially considering the drop on July 22.

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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

Disclaimer

Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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