tl;dr
The impending launch of U.S.-based exchange-traded funds (ETFs) tied to ether's spot price has led to an increase in hedging activity in the options market. Implied volatility (IV) for short-term ether options has risen, indicating heightened demand for protection against price fluctuations. Traders...
Increased implied volatility in ether's short-term options suggests heightened hedging activity. U.S.-listed ether ETFs are set to debut, prompting investors to hedge against price swings. Ether's implied volatility is higher for short-term contracts, indicating uncertainty among traders. Traders anticipate increased ether volatility relative to bitcoin, reflecting optimism about ether. Hedging activity in ether aligns with bullish expectations for the imminent launch of spot ether ETFs in the U.S.
The impending launch of U.S.-based exchange-traded funds (ETFs) tied to ether's spot price has led to an increase in hedging activity in the options market. Implied volatility (IV) for short-term ether options has risen, indicating heightened demand for protection against price fluctuations. Traders also anticipate greater ether volatility compared to bitcoin. This surge in hedging aligns with bullish expectations for the upcoming ether ETFs, with investors preparing for potential market impact similar to the debut of bitcoin ETFs. However, the current market sentiment and ether's positioning suggest lower chances of a post-debut pullback compared to bitcoin in January.
Relative richness of ether's short-term options-induced implied volatility suggests a pick up in hedging activity. The U.S.-listed ether ETFs are expected to begin trading next week. The impending debut of U.S.-based exchange-traded funds (ETF) tied to ether's (ETH) spot price has investors scrambling to the options market to hedge or protect existing market positions from price swings. Implied volatility (IV), or options-derived market expectations for price turbulence over a specific period, has ticked higher across timeframes, according to data sources Deribit and Kaiko. That's a sign of increased demand for options or derivatives offering protection against price swings. A call protects against price rallies, while a put offers insurance against price slides.
The hedging activity has been more pronounced in short-term contracts, as evidenced by the recent relative richness of implied volatility determined by options contracts expiring on July 19 relative to those expiring on July 26. According to Kaiko, the July 19 expiry IV rose from 53% on Saturday to 62% on Monday, topping the July 26 expiry IV. "The increase in IV on the July 19 contract suggests traders are willing to pay more to hedge existing positions and protect against sharp price moves in the short run. This spike in near-term contracts IV indicates a level of uncertainty among traders," analysts at Kaiko said in Monday's edition of the newsletter.
Traders also expect increased ether volatility relative to bitcoin. According to data source Amberdata, the spread between Deribit's 30-day ether and bitcoin implied volatility indices (BTC DVOL and ETH DVOL) has consistently averaged around 10% since late May, significantly higher than 5% in the first quarter.
Crypto exchange Bybit and analytics firm BlockScholes made a similar observation in a report shared with CoinDesk on Monday. "Key findings indicate that investors are increasingly optimistic about ETH, particularly in anticipation of the imminent launch of the first Ether Spot ETFs in the United States. This optimism is reflected in ETH's sustained volatility premium over BTC, which has persisted amid heightened market activity," the report said.
The pick-up in hedging activity in ether is consistent with the uber-bullish expectations from the spot ether ETFs, which are expected to begin trading next Tuesday . According to Gemini, spot ether ETFs will likely draw $5 billion in net inflows in the first six months, boosting ether's market value relative to bitcoin. Besides, traders, mindful of the "sell-the-fact" phenomenon that followed the debut of bitcoin ETFs on Jan. 11, might be preparing for similar price volatility in ether. Traders, however, should note that the present market mood and ether's bullish positioning are significantly more measured than bitcoin in early January, suggesting low odds of a post-debut sell-the-fact pullback.
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Dividend Yield: None
Beta: None
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Price/Earnings Ratio: 32.62
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Shares Outstanding: 489,592,000
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Return on Assets: -0.775
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Industry: FINANCE SERVICES
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Dividend Yield: None
Price/Earnings Ratio: 5.1
Return on Equity: 15.83%
Beta: 0.357
Revenue: 3,777,835,000
EPS: $263.42
Net Income: 3.27
P/E Ratio: 1.156
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