ETH price losing volatility performs well due to interest

ETH price losing volatility performs well due to interest
Written by:
Ali Raza
May 21, 2020
  • Ethereum's falling volatility and traders' interest caused a significant surge in Ethereum options contracts.
  • Coin's price saw significant improvement, as well, leaving little doubt about the growing interest.
  • The largest exchange for Ethereum options, Deribit, saw nearly 30k growth in open positions in a single day.

Ethereum recently saw a lot of activity as far as its price is concerned, seeing a major boost after the mid-March price crash. The altcoin started its recovery relatively soon after the price drop.

However, its price lately started forming another trough, as it hit $211.09. At the same time, it showed signs of low volatility, which led to another growth.

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According to recent information, the metrics indicated that Ethereum options contracts with different strike prices and same expiration have different volatility levels. Data analyst, Skew, shows that ETH’s 25d skew in the short term — 1 month — reported a major surge on May 20th.

As a result of this behavior, the value skyrocketed by 21%, after seeing only 1.9% growth only a day before.

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Traders’ optimism surges

Needless to say, this change is quite drastic and unexpected. It previously happened in March, but also in the early days of May. On both occasions, it took place due to massive volatility that hit the entire crypto market, usually starting with Bitcoin.

The sharp decline was also noted in the ETH ATM Implied Volatility metric, which dropped from 82% to 73% in the same 1-month period.

With all of this going on, the traders became extremely optimistic about the ETH market, not expecting any further price swings.

The sentiment, combined with the rising skew, left little doubt about the surging interest of those who trade ETH options. The short-term realized volatility also dropped by quite a bit, from 84% to 77%.

This change was rather clear on Deribit, which is one of the largest options exchanges for Ethereum. It quickly saw ATH on May 20th, when the number of open positions for Ethereum skyrocketed from 346,000 to 371,000 in a single day.