The Merge will take place in September according to Ethereum network developers, a move that prompted traders and investors to buy ETH.
Bulls gained an advantage in July’s $1.26 million monthly options expiry by Ether’s ( Ethereum) 53% rally from July 13 to 18. This was done by Ethereum developers who set a tentative date to “Merge” – a transition from the cumbersome proof-of work (PoW), mining mechanism.
Some analysts believe that Ether could achieve “ultra-sound money” status by removing the extra ETH issuing required to finance traditional mining consensus’s energy costs.
It is still unclear if sound monetary policy revolves around continuously changing the issuing or burning rules. However, there is no doubt that the video call of the Ethereum developers on July 14 helped propel the ETH price.
Multiple speculations arose about whether Ether may be aiming for its old all-time high on July 26th with a sudden spike in Ethereum network active addresses. Santiment, an analytics firm, reported that there were 1.06 million daily active addresses in 24 hours. This surpasses the 2018 high of 718,000. There have been theories that Binance was doing a maintenance sweep, but this has not been confirmed.
According to Coinglass data, the main victims of Ether’s remarkable 20% recovery on July 27, were leveraged bearish trader (shorts), who suffered $335 million in total liquidations at derivatives markets.
Open interest for Ether’s July month options expiry is $1.27 Billion, but this number will likely be lower because bears were too optimistic. After ETH fell below $1,300 between June 13-16, these traders became too complacent.
Bears were surprised when the pump topped $1,500 on July 27, because only 17% have placed put (sell) options above that price.
The 1.39 ratio of call-to-put shows that the $730million call (buy) open rate is dominant over the $530million put (sell). However, Ether is close to $1,600 so most bearish bets are likely to become worthless.
Only $80 million of put (sell) options are available if Ether’s price is above $1,500 on July 29 at 8:00 UTC. This is because a right of selling Ether at $1500 or less on expiry is worthless if Ether trades higher than that level.
To make a decent profit of $230 million, Ether bulls must keep the price above $1600 by July 29. To reduce the damage to $60,000,000, the bears need to push the price below $1,500.
Bears shouldn’t have much leverage to push ETH prices lower after the $330 million worth of leverage short positions were liquidated on July 26th and 27. Bulls will be better placed to drive ETH higher once the July 29th monthly options expire.