Is Ethereum Set to Rally After Shanghai? Data Suggests Bullish Sentiment
April 10 2023 - 12:46PM
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Over today’s trading session, Ethereum and the crypto market are
showing strength and are trading in the green. The positive price
action could be supported by the expectation around ETH’s upcoming
major upgrade, “Shanghai.” Related Reading: Analyst That Predicted
2022 Crypto Bottom Says Ethereum Will Hit $10,000 Scheduled for
April 12th, this upgrade will allow Ethereum 2.0 validators to
un-staked their locked ETH. As a result, the cryptocurrency’s
available supply is bound to increase, which could translate into
negative price action. So far, the opposite is taking place as
traders remain optimistic. As of this writing, Ethereum (ETH)
trades at around $1,900 with a 3% and 5% profit over the last 24
hours and the previous week, respectively. To Sell Or Not To Sell,
Ethereum Investors In A Dilemma According to crypto analysis firm
Blofin, the ETH supply locked on the “Beacon Chain,” the
Proof-of-Stake (PoS) blockchain that supported the transition into
this consensus algorithm, is trading at a loss. Thus, investors
have little incentive to sell their ETH even after “Shanghai.” It
is more likely that these investors will wait for ETH to reclaim
previously lost territory, which could support its bullish price
action and extend the rally into the high $2,000s. However, Blofin
warned: The Ethereum Shanghai upgrade is just around the corner,
yet this is not leading to increased selling pressure as most
staked Ether is currently at a loss. However, the risk of a
sell-off cannot be ignored, and the macro uncertainty around the
upgrade is also increasing. In the options market, Blofin records
risk aversion among investors, which translates into a “stable”
market dynamic. There are a few changes in ETH option contracts’
implied volatility (IV) and speculation around the cryptocurrency.
In that sense, most ETH options traders are taking long positions
by buying short-term expiring call contracts. This dynamic could
support further profits for ETH, but Blofin emphasizes the risk
avert sentiment: Most ETH option block traders are bullish on ETH
after the Shanghai upgrade. Notably, some traders bought the call
spread expiring in 2024q1, which is more likely to be a trade
driven by risk management or arbitrage, given the ask-bid spread of
yearly options. Related Reading: Bitcoin Shows Parallels With 2017
Cycle, Here’s What Can Happen Next Additional data from Bitfinex
Alpha indicates a spike in the put-to-call ratio for ETH options.
As seen in the chart below, the ratio stands below 1, which hints
at predominate bullish sentiment among investors favoring call
(buy) over put (sell) contracts. Chart from Tradingview, The Block
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