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Someone Just Bet 17,350 ETH Contracts on Ethereum Reaching $7,000 by End of 2022

Fri, 04/22/2022 - 13:10
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Arman Shirinyan
Massive bet on Ethereum was placed on options market
Someone Just Bet 17,350 ETH Contracts on Ethereum Reaching $7,000 by End of 2022
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The co-founder of Three Arrows Capital shared interesting data suggesting someone has opened a massive bid on Ethereum dec2022 calls, which suggests that Ethereum is going to reach $7,000 (strike price) by the end of the year.

Options are quite popular among professional traders and allow receiving a massive profit in a relatively short period. Quite often, such a large call on a price increase may be a part of a hedge position opened at the same time as a short-order.

Ethereum Chart
Source: TradingView

Even though options are often used as a hedging tool, it is not likely that this is the present case as the size of the original short position would be massive; traders normally use around 5% of the initial position for hedging. In this case, the original position would be around $36 million, which would have been noticed by market watchers.

The reason behind opening such a large position may be because of insider trading or a really firm belief in the second largest cryptocurrency on the market. But sometimes traders use options contracts like trading tools.

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For example, the price of each call contract rises whenever the price of the underlying asset comes closer to the strike price. In this case, the value of the contract concluded by a trader will rise exponentially, even if Ethereum cannot reach $7,000.

Unfortunately, Ethereum has failed to deliver a powerful performance at the beginning of 2022 and now trades with a 36% loss since the end of 2021. Such a large discount does not seem to satisfy the demands of investors, which is why new funds are being poured into Ethereum.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.