The last couple of weeks have been nothing short of a roller coaster for Ether (ETH), which oscillated between $2,000 and a record-high $2,650. The 20% crash on April 17 caused a $1 billion liquidation on long futures contracts, and it also drastically reduced investors' appetite for risk.
However, as displayed above, the 28% gain over the last couple of days caused the open interest on Ether futures to reach $8.2 billion, which is just 5% below its April 15 record. A similar event took place in the options markets, which have grown by 45% since the March 25 expiry.
The recent price recovery has been attributed to Paypal's CEO stating that demand for cryptocurrencies has been multiple-fold higher than expected. Moreover, the net value locked in Ethereum smart contracts reached a record-high $54.2 billion, led by Uniswap, Compound, and Maker.
The 154% increase in this metric happened while network fees sustained levels above $8 per transaction, therefore easing speculation of predatory competition. Meanwhile, Binance Smart Chain reached a $17 billion TVL, and the decentralized finance (DeFi) growth seems more than enough to support both.
Open interest soared, but 22% of it is about to mature
While the current $4.2 billion Ether options open interest represents an all-time high, $930 million of these are set to expire on April 30. As usual, Deribit exchange reigns supreme with a 90% market share.
It is worth noting that not every option will trade at expiry, as some of those strikes now sound unreasonable, especially considering there are less than three days left.
Options are divided into two segments, as the call (buy) options allow the buyer to acquire Ether at a fixed price on the expiry date. These are often used on either neutral arbitrage trades or bullish strategies.
Meanwhile, the put (sell) options are the preferred instrument for hedging to gain protection from negative price swings.
To understand how these competing forces are balanced, one should compare the calls and put options size at each expiry price (strike).
A weird pattern emerged as bears were caught by surprise, with 91% of the put options open interest at $2,400 or lower. Meanwhile, bulls were overly optimistic, with nearly half of those call options at $2,880 and above.
Bulls have a decent $115 million lead
However, any expiry above $2,240 is highly favorable for the bulls who currently lead with a $115 million open interest. This difference favoring call options would double at $2,880, although this doesn't seem to justify a 10% hike in Ether price.
As for the bears, this game seems utterly lost as only a miracle 17% drop below $2,240 would be enough to eliminate the call options advantage.
At the moment, there is little reason to believe that the April 30 options expiry will bring any surprise for Ether price. Both Deribit and OKEx settle at 8:00 AM UTC, and the focus of traders is likely to just move on to June options.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.