Ethereum is Waiting for an Important Event Tomorrow. How will the Price React?
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On Friday, the Deribit exchange will expire 95 thousand options for Ethereum, the cryptocurrency of Vitalik Buterin. Why is it worth investing in, and how do such derivatives work?
On Friday, April 24, 95 thousand options on Ethereum will expire on the Deribit exchange. At the current rate, this is about $ 18 million. This is the largest expiration of this type of derivatives on the site since September last year.
An option is a contract giving the buyer the right to buy or sell an asset at a certain price or before a certain date. In other words, this derivative allows the Deribit client to complete an operation with Ethereum until April 24 inclusive. If this is not done before the deadline, the contract will become invalid.
The expiration of 95 thousand options on Ethereum on April 24 is unlikely to affect the price of cryptocurrencies, a private trader believes. He explained that this derivative gives the right to buy an asset, but calls for it. Probably, users of the exchange trading the instrument wanted to capitalize on the growth of its value, the expert suggested.
«It will not affect the price much. It is likely that the one who did this just wanted to make money on the growth of the value of the option itself. When, for example, on the expiration date, the option goes above the strike level – the expiration price, then a profit is formed»
The Bitxmi cryptocurrency exchange Analysts Opinion
A different opinion was expressed by the founder and CEO of Singapore’s BitXmi cryptocurrency exchange, Sanjay Jain. According to him, the price of Ethereum may change dramatically, but it cannot be predicted which way. There is a great demand for this type of derivatives from both sellers and buyers.
«The open interest graph shows that options for this date are quite highly liquid. There is great interest from sellers and buyers. However, this only indicates that after expiration, asset volatility is likely to increase. It’s very difficult to predict the movement trend…The course will rush either up or down, which usually happens when trading in large volumes. But in which direction – it is impossible to predict from the available information», — specified Sanjay.
He added that buying a cryptocurrency itself is a good investment idea. Ethereum is one of the best smart contract writing platforms. A large number of stable coins work on it. He emphasized that the current altcoin price levels characterize it relatively well to Bitcoin.
There are reasons to invest in Ethereum for the long term. One of them is the development of DeFi decentralized finance.
Last week Ethereum matched Bitcoin in terms of the number of assets transferred on its network. The daily altcoin indicator reached $ 1.5 billion, with 80% of transactions in blockchain coming from stable coins.
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