The futures and options expiry that took place on the 28th of May had wide-ranging consequences for Ethereum. This was because the cryptocurrency went around 60% from its low of $1,730 on the 23rd of May. Although the current interest stands at a range of $6.2 billion, just 16% of it expired on Friday. The rest of them will take place in contracts that have been set for June.
Every trader needs to account for the expiry in options- since it could throw a wrench in the forces and distort the balance in it. Nevertheless, this won’t be as important for other markets where longs and shorts have continuously matched throughout. Most of the options available have been categorized into two- the call options, which are usually used by neutral-to-bullish strategies, and the sell options, which work on neutral to bullish options.
This means that both futures for Ethereum- long and short- are always matched, which entails that options markets are pretty clear about which side has more advantage in this kerfuffle.
Ethereum’s futures open interest was drastically reduced after the correction
The continuous drop started from a value of $4,380 on the 12th of May which went on for 11 days, with the price bottoming at a point of $1,730. Nonetheless, the low prices of Ethereum didn’t last long as it kept climbing to a set position of $2,400. The open interest situated on futures went down by 54% to a value of $5.2 billion, where the leverages were liquidated and profits doled out to short-sellers.
Houbi, a crypto exchange has taken the lead with around $300 million set in open interest, as the ETH futures worth $980 million has already expired. CME is following it closely, but since CME traders usually move over some of the positions after a couple of days in trading, these numbers could reduce over time.
