Ether (ETH) is struggling to hold above the $2,600 resistance level after rallying 15.1% from September 18 to 23. Recent macroeconomic data shows that the weak economy has boosted the stock market, increasing demand for short-term government bonds. Against this backdrop, traders are betting that the $2.78 billion monthly Ether options expiry on September 27 could consolidate the current bullish momentum.
Why Ether Price Is Improving
The surge in Ether prices was largely driven by the US Federal Reserve cutting interest rates, signaling a shift towards more accommodative monetary policy. As a result, the S&P 500 hit a record high on September 24. Additionally, a decline in the global Manufacturing PMI on September 23 added to investors’ concerns about the health of the economy.
The yield on the 2-year US Treasury note fell to a 24-month low as investors sought safety in government-backed assets. Current concerns about an economic downturn have benefited cryptocurrencies such as Ether, which are considered scarce assets.
But from a broader perspective, Ether prices have fallen 33% over the past four months. The decline comes after a U.S. exchange-traded fund (ETF) launch fell short of expectations, leading to $684 million in outflows, according to data from Farside Investors.
The $2.77 billion in options open interest includes $1.82 billion in calls and $0.95 billion in puts. While bulls appear to have the upper hand, with $1.47 billion in calls targeting prices of $2,700 or higher, those positions will expire if Ether remains below that level on September 27. So even with fewer puts, bears still have a chance to tip the balance in their favor.
As the price of Ether rises, so does demand for its smart contract processing capacity. The number of transactions on the Ethereum network increased by 15% in the seven days leading up to September 24, pushing average transaction fees to more than $4.50, up from $1.45 just ten days earlier.
Additionally, increased Ether issuance has also contributed to the asset's struggle to reclaim $3,000. According to data from Ultrasound Money, a total of 58,856.4 ETH has been added to supply over the past 30 days, representing an annual inflation rate of 0.6%. These factors have led to concerns that Ether's upside potential may be limited, especially with competition from platforms like Solana and BNB Chain, which offer transaction fees that are more than 20 times lower.
Bears are in good position to determine the outcome of the $2.8 billion monthly options
Against this backdrop, traders believe that Ether bulls need to prevail in the upcoming options expiry to have a chance of pushing the price back to $3,000.
Below are four most likely scenarios based on the current Ether price trend, with the potential impact of calls and puts for the September 27 expiry. These estimates assume that puts represent bearish positions, while calls are consistent with a neutral to bullish strategy. However, it should be noted that this is a simplification and does not account for more complex investment approaches.
Between $2,400 and $2,500: The outcome would favor the put option by $225 million.
Between $2,500 and $2,600: The outcome would be favorable for the $100 million put option.
Between $2,600 and $2,700: The balance shifts, with call options gaining an advantage of about $70 million.
Between $2,700 and $2,800: The scenario favors the call option, with a net result of $220 million in their favor.
In summary, the best chance for Ether bulls to gain a significant advantage is to push the price above $2,700 by September 27. However, the path for the put option to gain a $100 million advantage is clearer, as the current support level of $2,600 continues to be tested.
