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On July 29, almost $1.2 billion worth of Ethereum options are going to expire at the max pain price of $1,400. The put/call ratio is 0.67, so most derivatives traders and investors are betting on the Ethereum price increase. But the max pain price suggests that we will see the second biggest cryptocurrency plunge in the upcoming days.
With most options open around $1,400, most bulls and bears are aiming at Ethereum to drop further and the end of the reversal rally that started a few weeks ago. While some traders might be using options to hedge their spot positions, Ether's rally further up is questionable, considering the lack of inflows and technical resistance it faced on the weekly timeframe.
The highest call options volume on the chart suggests that the majority of bulls believed in Ether reaching $1,500. The lack of orders placed at extremely high price levels suggests that the short-term value increase did not fool the market and acted rationally, instead of placing bets on ETH reaching extreme highs like $2,000.
Ethereum rally is fading
According to the technical situation on the chart, Ethereum's rally is struggling as the coin fails to break the 200-week moving average that acts as a main barrier for assets in a bearish trend.
Arman ShirinyanIn addition to facing an extremely strong resistance level on a long-term chart, Ethereum painted a "dangerous" candlestick pattern called "hanging man," which usually appears at the top of any short or mid-term rally and indicates that the buying power is no longer present and the asset's price is going to reverse.
Alex Dovbnya
Vladislav Sopov
Dan Burgin