Here’s what to expect from the $1.15 Billion ETH options expiry
As the ETH community gears up for the Ethereum Berlin upgrade, the altcoin is trading at $1836 based on price data from CoinMarketCap. ETH’s price is up 2% in the past 24 hours however based on the increasing total value in ETH 2.0’s deposit contract, the circulating supply is expected to drop. A drop in supply could be bullish for the altcoins. This signals a bullish trend reversal in the price rally in the upcoming weeks. However, there is one roadblock that could lead to a price correction, on the 26th of March, $1.15 Billion worth of ETH options are set to expire.
The current optimism that comes from the increasing deposits in the ETH 2.0 contract and the leveraged trades is likely to drop if the options expiry leads to a drop below the $1600 level. When Ethereum is overleveraged and traders are over-optimistic, traditionally there is a transition in the HODLing pattern and a change of hands before the altcoin rallies towards the ATH. In anticipation of the upcoming Ethereum options expiry, the inflow of ETH to exchanges has dropped, hitting a 1-month low based on data from Glassnode. This drop is instrumental to a shortage of supply and the building bullish narrative.
This could be key to supporting Ethereum’s price at the current level, as a shortage offers needed support to the $1800 level. Additionally, DeFi tokens are bouncing back to the 2020 level and ETH’s TVL in DeFi has increased over 8% in 30 days. This is a relatively high TVL growth in the past 90 days. This is a bullish sign for Ethereum’s price rally, at a time when LINK, UNI, COMP are offering close to 10% in less than 24 hours. DeFi tokens with increasing market capitalization and volatility are contributing to the increase in Ethereum’s price and trade volume.
The upcoming options expiry could lead to a significant correction and the price may drop below $1600, however, it is expected that once Bitcoin starts trading sideways (ETH and BTC are highly correlated at this point in the market cycle, over 80%) altcoins may start rallying again, led by DeFi tokens and ETH may hit new ATH in the following weeks. However, the immediate impact of the $1.5 Billion options expiry on spot exchanges could be a drop in price and open a buying opportunity for retail traders, before hitting the previous ATH.