Ethereum Put/Call Ratio Jumps – Are Bearish Bets Building Up Ahead of Shappella Upgrade?

  • The ratio between the open interest of Ether (ETH) put and call options jumped to its highest level since last May at 0.47 on Tuesday.
  • This could suggest a build-up of bearish bets in the market ahead of an upcoming series of major upgrades to the Ethereum network on the 12th of April.
  • The rise in the ratio could also reflect that more traders have become interested in shorting Ether in wake of recent price gains.

Shapella Upgrade Overview

On the 12th of April, the Ethereum network will undergo a series of upgrades that will, first and foremost, enable the withdrawal of staked Ether tokens from the staking smart contract.The series of upgrades has been termed “Shapella”, to represent a combination of the names Shanghai and Capella.Shanghai refers to a hard fork taking place on the Ethereum blockchain’s execution layer, while Capella is the name for the upgrade taking place on the c.

Open Interest Analysis

A ratio in open interest of put and call options below 1 means that investors favor owning call options (bets on the price rising) over put options (bets on the price dropping).While the ratio is still well below 1, meaning investors still resoundingly favor bullish option bets, the recent rise in the ratio suggests these bullish bets have been pulled back on sharply in recent days. Ether’s Put/Call open interest ratio has seen a rapid jump from its end-of-March levels of around 0.37.As well as possibly reflecting bets that there will a post-upgrade sell-off,the rise in this ratio could also reflect that more traders have become interested in shorting Ether in wake of recent price gains. ETH was last changing hands just above $1,900 ,having made decent progress towards $2,000in recent days

Option Expiry Impact

It’s worth notingthat alarge fall inthe dollar valueof aggregatedEther optionopen interestsince thee nde f Marchmightalso explainthe riseinEther’sput/callratio.OpeninterestinEtheroptionswaslastjustunder$5.0billionhavingrecentlybeenas highas$7.5billion.Openinterest oftenseesabigdropattheendofeachquarterasinvestorsamidawaveofoptionexpiriesanditseemsthattheexpiryofbullishcalloptionbetslikelydominated .

Will ETH Dump After The Shapella Update?


Itwillbeinterestingtoseewhetherinvestorsrebuildtheiroptionexposureoverthecomingquarterandtowhatdegreethis(ifatall)pushestheput/callratioloweragain .

Conclusion


TheupcomingShapellaupgradetotheEthereumnetworkwillenablethewithdrawalofstakedEthtokensfromthestakingcontractonApril12thwhichcouldleadtoariseintheratiooftheopeninterestbetweenthetwooptionsi.e.,PutOptionsandCallOptionsaswellastoashorteningoftherecentpricegainsforETHcryptocurrency .

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