The Ether Trade That Made the Most Noise Last Week

During the bull market of early 2021, hyperbullish bets on bitcoin (BTC) and ether (ETH) often crossed the tape on the leading crypto options exchange, Deribit. Two years later the opposite is happening, with market participants betting on an extended slide in ether.

Last week, a buy order for 50,000 contracts of ether’s $400-strike price put option expiring in June appeared on Deribit’s order book, raising alarm bells in the crypto community. At press time, ether was priced around $1,300, so the put buyer is expecting a 69% slide in less than six months. On Deribit, one ether options contract represents one ETH.

«On ether, the trade that made the most talk was the purchase of puts $400 on June 2023 made on-screen with a resting bid of 50k contracts,» digital assets data provider Amberdata said in its weekly newsletter published Sunday.

A put option gives the purchaser the right but not the obligation to sell the underlying asset at a predetermined price on or before a specific date. A put buyer is implicitly bearish on the market. A resting bid is an order whose price is away from the market and is yet to be executed.

«If the entity is willing to buy them, it thinks they have value, which can only be true if it falls below $400,» Patrick Chu, director of institutional sales and trading at Paradigm, said.

As of early Monday, the order was partially filled for 40,000 contracts. The purchaser paid a premium of 0.0095 ETH per contract, amounting to a total outlay of 380 ETH or $494,000, according to data from Deribit.

The call-put skews measure the cost of bullish calls relative to puts. The negative number indicates a bias for put options.

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