Alarm Bells Ring as ETH Puts Soar

Ethereum (ETH) has shown significant traction in its derivatives market, particularly in the domain of options trading.

According to the latest data from QCP, the risk reversals for ETH’s front date expiries have turned negative.

This change suggests a growing concern among investors regarding the potential for a decrease in Ethereum’s spot price.

Risk reversal, a metric used to gauge market sentiment, measures the difference in implied volatility between call and put options.

A negative figure indicates a market consensus leaning towards a future decrease in the underlying asset’s value. There is heightened demand for put options as investors seek to hedge against potential losses.

Put options offer cryptocurrency investors a strategic tool to protect against or bet on the downturn of a digital asset’s value. Should the market value of the cryptocurrency drop beneath the agreed-upon price (strike price), the investor has the option to sell the crypto at this higher strike price.

Over the recent period, there has been a 15.42% increase in trading volume, reaching $47.85 billion, alongside a modest 2.92% rise in open interest, amounting to $13.99 billion.

However, the options market has experienced a sharp decline in volume by 51.55%, settling at $320.63 million, according to CoinGlass data.

At the same time, options open interest saw a slight increase of 1.63% to $6.38 billion.

The current Ethereum price stands at $4,046, with fluctuations within a 24-hour range of $3,863 to $4,073.