The crypto market has witnessed extreme turbulence today, with massive liquidation and accumulation of the global market capitalization. Although Ethereum was gearing up for a breakout today, a recent market downturn has dispelled its bullish sentiments. After Bitcoin’s abrupt drop, Ethereum’s price also experienced a wave of panic selling, spurred by false reports from blockchain analytics firm Arkham Intelligence. Their tweet claimed that Bitcoin wallets associated with the US government and the Mt. Gox hack have become active again.
Ethereum Options Market Shows Negative Sentiment
Fourteen days after Ethereum’s Shapella upgrade, the cryptocurrency options market is pointing to an increased perception of downside volatility for the smart contract blockchain’s native token, Ether (ETH), compared to the market leader, Bitcoin (BTC).
Right now, options tied to Ether and Bitcoin favor put or bearish bets that offer buyers protection against price falls. However, the demand for puts in the Ethereum market is higher than in the Bitcoin market.
Ether’s one-month bearish out-of-the-money (OTM) puts carry a five-point volatility premium over bullish OTM calls, while Bitcoin’s OTM puts have a three-point premium over calls, according to the options 25-delta risk reversal data verified by crypto derivatives analysis firm Block Scholes.
Block Scholes research analyst Andrew Melville said ETH’s risk reversal has now reversed the post-Shapella recovery compared to BTC options, with OTM puts priced at a 5-vol premium over calls with a term of 1 month. He also indicated that this reflects a return to the somewhat more negative sentiment attributed to ETH, which has been a recurring observation throughout the year.
ETH price moves near $2K despite bearish pressure
The price of Ethereum experienced several fluctuations emerging from the $1,818 support area. Initially, ETH shot past the USD 1,900 resistance, but it experienced significant selling pressure around USD 1,940, leading to a downturn.
This resulted in a precipitous 10% drop to below $1,900, mirroring Bitcoin’s $30,000 decline. The price then visited the primary support zone at $1,850 and reached a low near $1,785. Currently, the price is on the rise again, trading above USD 1,850 and the 100-hour moving average.
Ether is now trading above the 61.8% Fibonacci retracement level, consistent with its recent drop from the $1,960 swing high to the $1,785 low. Immediate resistance can be found near the $1,915-$1,950 area.
At the time of writing, the price of ETH is trading at $1,884, down more than 3.5% in the past 24 hours. On the downside, initial support is close to the $1,870 level. After that, the next key support is around the $1,842 area, below which ETH price could potentially retest the $1,800 support zone.
However, ETH is predicted to rise from USD 1,860 as the RSI level is trading in a healthy region. A breakout above USD 1,950 clears the way to USD 2K for Ethereum.