Ethereum’s Wild Ride: Bulls Take Charge Amidst Market Speculation

The ETH Surge: What Happened?

Between July 13 and July 18, Ethereum (ETH) experienced a jaw-dropping 53% rally that shook the crypto world. Investors who had their popcorn ready for this theatrical spectacle were undoubtedly pleased as Ethereum bulls set the stage for a $1.26 billion monthly options expiry. The catalyst? Ethereum developers announced a tentative date for the infamous “Merge,” a transition from the traditional proof-of-work mining that had many doubters and believers alike scratching their heads in confusion.

What’s All the Hype About?

One of the more curious claims during this frenzy is that the removal of excess ETH issued for financing energy costs could lead Ethereum to finally achieve its coveted status as “ultrasound money”. After all, who wouldn’t want their cryptocurrency to sound more exciting? Once the transition is finalized, the issuance of Ether on the Beacon Chain will shrink to around 1,600 ETH per day, a significant drop from the previous 13,000 ETH per day under the PoW system.

Is Ultrasound Money a Thing?

However, what constitutes sound monetary policy remains a hot topic. There’s a robust debate swirling around whether fluctuating issuance and burning rates should really dictate this status. It’s like asking if pineapple belongs on pizza—one group loves it, while the other recoils in horror!

Unexpected Traffic Surge

As the ETH price soared, something curious happened: a spike in active addresses on the Ethereum network. Reports suggested that the number of daily active addresses hit an astounding 1.06 million, eclipsing its previous high of 718,000 set back in 2018. This sent ripples of speculation as analysts wondered if Ether was gearing up to reclaim its glory days.

The Shorts Are Getting Shorter

In the wake of Ethereum’s impressive performance, many leveraged bearish traders were left in disbelief. On July 27, the liquidations at derivatives exchanges reached a staggering $335 million, showcasing the plight of those who underestimated the resilience of ETH’s bulls. It’s like cannonballing into a kiddie pool—you’ll be soaked, and nobody takes you seriously afterward!

The Numbers Game: Call vs. Put Options

As the July options expiry dawned, some opened their wallets and took positions. Overall open interest reached $1.27 billion, but the reality fell short for many overly-optimistic bears. With many bets placed below $1,600, the situation shifted dramatically when ETH climbed above $1,500, leaving them gasping for air like fish out of water.

How Bearish Bets Fared

Data showed a clear dominance of calls over puts—$730 million in calls versus $530 million in puts—hinting that the bulls had the upper hand. As the expiration date approached, the stakes were high; anything beneath $1,500 would leave many bearish bets worthless. Talk about a tough break!

Bulls vs. Bears: The Final Countdown!

By evaluating the current price trends, it’s clear that bulls are pretty comfortable heading into July 29, with the tides favoring their pocketbooks. Here’s a peek at the theoretical profits based on expiry prices:

• Between $1,400 and $1,500: 120,400 calls vs. 80,400 puts – nets a $60 million favor for bulls.
• Between $1,500 and $1,600: 160,500 calls vs. 55,000 puts – a glorious $160 million for the bulls.
• Between $1,600 and $1,700: 187,100 calls vs. 43,400 puts – dollars keep stacking, this time to a whopping $230 million.
• Between $1,700 and $1,800: 220,800 calls vs. 40,000 puts – bulls rejoice with a stunning $310 million advantage.

This creates an interesting battleground where bears may want to pack their bags and make way for another market rally.

A Fateful August Awaits

As we approach the last day of July, it’s crucial for bulls to maintain prices above $1,600 if they hope to secure that tantalizing $230 million profit. In a stark contrast, bears would need something akin to a miracle to dip below $1,500 and limit their losses to $60 million. Given the scale of liquidations the bears have faced, it appears they might want to rethink their strategy as August looms on the horizon.