Bearish Momentum Ahead: Ether Flirts with $4K Breakout But Put Demand Suggests Weakness
Ether (ETH) options traders are bracing for near-term price weakness as Ether prices convincingly rose past $4,000 to the highest level since late 2021. The tokens one-month call-put skew has turned negative, hinting at a relatively higher demand for put options. The 60-day skew has also flipped in favor of put options. The 90-day and 180-day metrics, however, remain positive, suggesting a long-term bullish outlook. This shift in sentiment could be attributed to concerns that the U.S. Securities and Exchange Commission (SEC) may not approvals a spot Ether exchange-traded fund (ETF) before May. This is unlike its move in January when it approved multiple Bitcoin spot ETFs, sending Bitcoin prices to a record high of over $70,000.nnInvestors’ interest in near-term Ether puts likely comes from the diminishing possibility of the SEC approving a spot Ether ETF before May, according to QCP Capital, an investment firm. Projections by ETF analysts at Bloomberg have reduced the odds of a spot Ether ETF approval from 70% to 30%. The market odds have also shrunk from over 70% in January to 31% according to the decentralized betting platform Polymarket. In addition to that, the bank JPMorgan stated the odds of SEC approvals of an ETH ETF by May to be 50%. However, some optimism remains as other observers expect SEC to approve BlackRock’s ETF application and make the decision on May 23. The 30- and 60-day skews at below zero give the indication of a bias towards puts. This comes as the 75% year-to-date gain in Ether’s value has been pushed by the expectation of the SEC approving the spot Ether ETF, which will allow traditional financial institutions to access Ether without the challenges of directly owning it. The SEC’s recent delay in its decision to approve the application of BlackRock and Fidelity for an ETF approval provides hope for BlackRock’s application’s approval on May 23.
