Ethereum Breaks New Record Amid 13% Rally, Options OI Reaches $7 Billion

Ethereum options hit a new all-time high as Ethereum continues to move in the local bullish rally started at the end of November, Wu Blockchain reports.

Contracts open interest spikes

Ethereum options currently remain at the historical peak in open interest that is currently staying at $7 billion. On Dec. 31, almost 700,000 options are going to be delivered with a "bullish" Put/Call ratio of 0.47. The approximate max pain price is $2,500 for the currently open Ethereum contract with expiry on Dec. 31.

ETH option holdings are at a historical peak. The largest option delivery date this month is December 31. 689,653 options for delivery, with 469,486 calls and 220,167 puts, and the Put/Call ratio is 0.47. The number of call options with an exercise price of $5000 is the largest. pic.twitter.com/xUaG3aMmBw

— Wu Blockchain (@WuBlockchain) December 3, 2021

Increased options open interest closer to the end of the year is not something new for Ethereum. Ethereum open interest usually spikes near the end of the year as volatility on the cryptocurrency market increases and traders tend to hedge their positions.

What does high open interest tell traders?

Usually, options are utilized as a reflection of current market conditions. Since Ethereum is moving in both short and long-term bullish trends, call (buy) options are prevailing on the market with the majority of traders betting on the asset's price spike to $5,000.

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But while some traders may use options for speculative trading, others utilize them for hedging their positions. By opening put options on values like $4,300, traders hedge their positions in cases of unexpected market volatility.

Ethereum's previous ATH currently remains at $4,880, and more analysts are expecting the second-largest cryptocurrency on the market to reach the long-awaited milestone by the end of the year when most altcoins have historically reached new highs.