Ether price faces pressure as $6 billion options expiry approaches

Over the past 40 days, Ether (ETH) has continuously failed to maintain a price above $3,400, causing many investors to worry that the downtrend may continue. Especially, the upcoming $6 billion ETH options expiration on Friday adds further pressure to the market, as bulls previously hoped the year-end price would reach $4,000 or higher, before a sharp 28% drop in November.

The Ether price at 3 p.m. on Friday (Vietnam time) will be the decisive factor in whether the bears continue to dominate or not, despite the fact that the number of call options (call) currently exceeds put options (put) by a ratio of 2.2 times.

Total open interest of ETH call options expiring on Friday, in USD | Source: laevitas.chIn the market, Deribit dominates with 70% of total open interest (open interest), followed by CME in Chicago with 20%. However, most of the $4.1 billion in call options will expire worthless on Friday, as investors mainly bet on a strong ETH rally by year-end, in the range of $3,500 to $5,000.

In reality, less than 15% of all call options are set at $3,000 or lower. Even when excluding overly optimistic call options at $5,000 or more – which usually have low costs for buyers – data shows that less than 25% of these contracts are placed below $3,200.

Some investors even sell insurance call options at very high levels like $8,000 or $10,000 for year-end expectations, despite the unlikelihood of achieving such targets.

The bulls were confident that Ether would regain the $3,400 mark by the end of the year, while the bears focused their bets on a price range from $2,200 to $2,900, which is somewhat extreme.

If Ether trades above $2,950 on Friday, over 60% of the $1.9 billion in put options will expire worthless. However, the bears still hold the advantage as long as ETH remains below $3,200.

Total open interest of ETH put options expiring on Friday, in USD | Source: laevitas.chThe market is also influenced by Intel’s failure to produce advanced chips in the US to compete with the giant Taiwan Semiconductor (TSMC US). According to Bloomberg, Nvidia (NVDA US) has had to halt production trials based on Intel’s process technology.

Increasing risks for ETH options traders

Amid the pessimistic economic outlook regarding the impact of artificial intelligence in the US, many investors have proactively hedged their ETH positions. Demand for bearish options strategies such as “bear diagonal put spread,” “bear put spread,” and “bear call spread” has surged, especially after Ether failed to break above $3,400 several times in recent five weeks.

Top ETH options trading strategies over 48 hours on Deribit, USD | Source: Laevitas.ch## The $3,100 level becomes a critical threshold for Ether bulls

Below are four possible scenarios for the ETH options expiration at the end of the year, based on current price trends:

If Ether closes below $2,900 on Friday, investor sentiment may continue to weaken. However, bulls still have a chance to push the price up to $3,100, helping to rebalance the market position and lift Ether out of the December bottom zone of $2,775.