Traders who were long on Ethereum were preparing to “sell the news” in September, they are looking "extremely bullish" for September, but leaning bearish again for October, the month after the merge.
Ethereum (ETH-USD) Traders Prepared to “Sell the News” in September
When is record interest in call options not a good omen for future pricing? For now, with ETH, Glassnode analysts say in today's "Week On Chain" newsletter.
Specifically: After September – assuming the big Merge to proof-of-stake happens on schedule – ETH could be headed for a significant “sell the news” moment.
When Glassnode prepared this chart, open interest in ETH options had reached $6.6 billion. That’s a return to 2021 levels, and darn close to the all-time high. Not to mention, it’s much higher OI than Bitcoin (BTC-USD) options (for the first time ever)!
Importantly: “If we look at the September contracts on Deribit, the directional bias of Ethereum traders is immediately clear. Call options dwarf put options for size, with traders betting on ETH prices upwards of $2.2k, with significant open interest even out to $5.0k,” Glassnode analysts write.
For ETH options in October, “we can see a dramatic decline on the right tail, with a relatively flat shape” compared to September, Glassnode notes. Plus, on the left tail, we see “significantly higher implied volatility, indicating traders are paying a premium for ‘sell-the-news’ put option protection post-Merge.”
So, that’s what we see in the options market… What about ETH itself? After all, if people are flooding into the crypto the way they are with the calls, it’s hard not to be optimistic!
Below is the ETH trading action, going back to 2021. That way, we can see the broader context:
The blue line is ETH prices, which surged over +500% before the “crypto winter” took hold in November – way more than BTC prices (orange line). Today, we’re back to +144% since January 2021.
The green and red bars along the bottom show that, during the 2021 bull market, we often saw 500,000 ETH traded per day (or more). Yet here in 2022, we’ve only seen that level of trading volume twice:
On June 13 – when Terra’s collapse took down Celsius Network (CEL-USD), etc. – 840,000 ETH traded on the downside.
The other time was June 15, when 564,000 ETH traded on the upside as the crash stalled out. ETH prices then consolidated for a good month until ultimately breaking out after July 14… When developers set a September 19 goal for the Merge.
day. If people were excited to buy/own ETH – versus simply speculate on a single event – wouldn’t you expect much more volume on the upside now?
Preparing to 'sell the news' on Ethereum merger in September
“Selling news” or “selling news” is the practice of creating news stories on a particular topic, to entice readers to click on a news article or link, and purchase a product or service.
Usually, a product or service gives the user something of tangible value.
To "sell news" one must have access to an already existing platform, a network of reporters, editors, and producers, and permission for the public to listen to what they want.
“Sell the news” is a term used to describe the process of reporting breaking news stories in order to increase the probability that they receive public attention.
The term comes from the outdated practice of paid journalists selling their news to publications.
Some early examples of news-selling campaigns include those undertaken by Edward R. Morrow of CBS News in the 1950s.
Cryptocurrency is the most popular at the moment, and one of the most sought-after assets is Ethereum, the second largest cryptocurrency by market cap.
The brainchild of a programmer with the pseudonym Vitalik Buterin, Ethereum is one of those new technologies that sound too good to be true.
Researchers Expose Miners Cheating the Ethereum Protocol
The research paper reports that it discovered the first evidence of a consensus-level attack on a major cryptocurrency. The paper is currently awaiting peer review but uses publicly available on-chain data and the open source database of Ethereum to confirm its conclusions.
The report, "Uncle Maker", has a strange title - and sheds an extremely dangerous light on the unethical miners who are manipulating the system.
Researchers accuse a large group of miners, F2Pool, of “manipulating the timestamps of blocks” on Ethereum “to obtain consistently higher mining rewards compared to honest protocol.”
How it works: The attack allows an attacker to replace competitors’ main-chain blocks after the fact with a block of its own, thus causing the replaced block’s miner to lose all transaction fees for the transactions contained within the block, which will be demoted from the main chain.
They had to verify that a “consensus-level attack” is even possible on Ethereum. Well, after designing algorithms that prove it, in theory.
Researchers say they found evidence of F2Pool actually doing it!
Then, their report explains how it got its name: The victim’s block, “although ‘kicked-out’ of the main-chain, will still be eligible to be referred to by other main-chain blocks, thus becoming what is commonly called in Ethereum an uncle.”
Researchers suggest concrete fixes for Ethereum’s protocol and implemented them as a patch that can be adopted quickly and mitigate the attack and its variants.
Still, it doesn’t reflect too kindly on F2Pool – which researchers told CryptoSlate “earned 14% more from block rewards” than they should have, plus “all the transaction fees contained within” the affected blocks…
Plus, it suggests the proof-of-work set up in the “Old Ethereum” is already a bit of a Wild West… Even before the Ethereum ecosystem largely shifts over to the new proof-of-stake chain in development.
Bottom line: It may take investors more time to see how big of a deal the Merge will be beyond September.
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