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Everything on the line for Ethereum on June 25th

Photo of: Joseph Stone
by Joseph Stone

Ethereum holders should get ready. On June 25, $1.5 billion worth of options will expire.

This date is one to mark on traders’ calendars. Ether (ETH) will see its biggest option expiration of the year on June 25. This represents $1.5 billion in open interest. For comparison’s sake, that’s 30% more than on March 26.

And why pay particular attention to this deadline? Because the previous such date resulted in a sharp drop in the price of Ethereum. Over 5 days, the cryptocurrency’s price was down 17% to $1,550.

After June 25, Ether could therefore experience another backlash. However, this trend is difficult to anticipate. Our colleagues from CoinTelegraph also point out that the expiration of options then led to a sharp rise.

Thus, after the fall followed a growth of 56% over the next three weeks. The Ether thus reached $2,500, in total decorrelation with the value of Bitcoin (BTC). Up or down, both scenarios are possible after June 25.

However, several other parameters came into play in March after the options expired. On March 11, Ethereum miners were staging a show of force to protest the blockchain update aimed at reducing gas fees, and thus their revenue.

In addition, Visa announced a first native transaction on Ethereum and its intention to use the blockchain for future crypto transactions. Finally, in April, the Berlin update of Ethereum was deployed.

Simply put, Ethereum news is leverage. The expiration of a very large amount of options alone cannot explain the downward trend following March 26.

CoinTelegraph therefore warns against “jumping to conclusions” and speculating on the upside or downside resulting from the upcoming $1.5 billion option expiration. It should also be noted that this expiration represents over 638,000 ETH options contracts, or 45% of the total open interest of $3.4 billion.

It should also be noted that these options are different from futures contracts. They are divided into two categories, call and put options. The first allows the buyer to acquire Ether at a fixed price on the expiration date.

These options are part of neutral or bullish arbitrage strategies. Put options are generally used to hedge or protect against negative price movements.

However, there are a disproportionate number of “$2,200+ calls”. Simply put, if the price of Ether on June 25 happens to be below that level, 73% of the neutral to bullish options will be worthless.