Regulative fears have put a damper to Ethereum traders’ $5,000 target

This week, ETH prices were within 2% of a new record high. The announcement by U.S. lawmakers to hold a hearing on stablecoins and eventual regulation was made this week.
This week, Ether (ETH’s) price was within 2% of its historic high. On Dec. 2, the altcoin hit its highest Bitcoin (BTC), terms price since May 2018. Ether’s 0.0835 BTC pair price represents a 229% gain in 2021. However, Ether bulls may come out empty-handed after Friday’s $680m options expiry.ETH/BTC prices at FTX. Source: TradingView. The ascending channel formation that was initiated in October likely reflects the $177 billion network’s total value in smart contracts (TVL). Moreover, Ether’s ETH 2.0 beacon chain balance reached an 8.45 million high, which is a 4.5% increase in November.Last week, four Ethereum blockchain-based metaverse projects generated more than $100 million worth of virtual land in nonfungible token (NFT) sales last week, according to reporting by Cointelegraph.However, Ether investors might be concerned about the United States Lower House meeting scheduled for Dec. 8 where the committee will focus on “Digital Assets and the Future of Finance.” Stablecoin issuers and exchange CEOs have been invited, so there’s some potential heat coming from the threat of new regulation.Regardless of the rationale behind ETH’s current 6% ETH price drop, bulls missed the opportunity to secure a $80 profit in Dec. 3 weekly options expiry.Ether options aggregate open interest for Dec. 3. Source: Coinglass.comA wider view using the call to-put ratio shows that bears have a 19% advantage as the $375million put (sell) instruments have more open interest than the $305 million call option (buy). The 0.81 indicator is misleading because most bearish bets have become worthless since September’s 49% bull run. For example, if Ether remains above $4,400 at 8:01 UTC on Dec. 3, only $68,000,000 worth of put (sell) options will remain. If Ether is trading above $4,400, it has no value. Below are the most likely scenarios, based on current price action. The expiry ETH price will determine the number of options contracts that are available for bulls (call) or bears (put) instruments. The theoretical profit is the difference in favor of each side. Between $4,300 and $4.500: 11,300 calls vs. 15,400 put. The net result is balanced. Between $4,500 & $4,700: 21,700 call vs. 7,300 put. The net result favors the call (bull) instrument by $65 million. Above $4,700: 26,000 calls against 5,000 puts. The net result is $100,000,000 favoring the call (bull), instruments. This crude estimate includes call options used in bullish bets, and put options that are used exclusively in neutral-to bearish trades. This oversimplification ignores more complex investment strategies. For example, a trader might have sold a call option and gained a negative exposure at Ether above a certain price. Unfortunately, it’s not possible to accurately estimate this effect. To make a decent-sized profit, bulls will need to move 4.7% from $4,500 up to $4,700. To make a $100 million profit, bulls will need to move 4.7% from $4,500 up to $4,700. To avoid losses, bears must keep Ether price below $4,000. This favourable outcome for bulls appears to be somewhat remote, despite the incentives to push Ether price higher than $4,700 before Friday’s expiry. Could this mean that bears could save this week’s options expiry date and avoid a $100m loss? It’s possible. Risk is inherent in every investment or trading move. Before making a decision, you should do your own research.

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