An Ethereum whale recently opened a substantial $11.15 million leveraged long position, signaling strong confidence in the cryptocurrency's near-term performance. This decision comes in tandem with a noticeable shift on Ethereum’s options market. As the last 48 hours have unfolded, the mood has shifted to one of almost giddy optimism. It’s a big bet by the major players, showing their confidence that more gains are to come for Ethereum. This follows Ethereum’s recent breakout from a bullish technical formation.
The whale’s long position, opened on June 10, includes a purchase of 4,000 Ethereum at an average entry price of $2,758.35. At 25x leverage, the full notional position has a liquidation price of $2,466. Right now, the whale is sitting on an unrealized profit of roughly $366,600. This case serves as an important reminder of the potential benefits and dangers of high-leverage trading in the speculative cryptocurrency market.
Bullish Technical Signals
Ethereum’s recent price action has many traders and analysts scratching their heads. The digital currency had a technical breakout above a bull flag pattern on Monday, a technical formation that usually comes before an extended move higher. This breakout may have given the whale the conviction to open this leveraged long position, expecting the bullish momentum to continue.
The bull flag pattern is characterized in the beginning by a strong price rally. It then goes into a consolidation phase, forming a flag-like appearance on the price chart. A breakout above the upper trendline of the flag is a common bullish signal, indicating a continuation of the prior uptrend. For technical analysts, this is seen as an opportunity to buy the dip in hopes of future price growth.
Options Market Sentiment Shift
According to data from blockchain analytics firm Glassnode, there’s been an impressive change in mood over the Ethereum options market. The 25-delta skew is down 9.5 points since Monday. This metric captures the difference in implied volatility between out-of-the-money call options and puts. This is a sign that traders are willing to pay a higher premium for call options, a sign of a bullish outlook.
In particular, the 1-week skew fell from -2.4% to -7.0%, and the 1-month skew fell from -5.6% to -6.1%. A negative skew implies that call options are trading at a higher implied volatility than put options, reflecting increased demand for upside exposure. The change is perhaps best seen by the dramatic reversal in the options market. Market participants have grown more bullish than ever before on ETH’s future price trajectory.
Implications for Ethereum
Together with the technical breakouts and a generally positive sentiment in the options market right now, there is a potentially bullish case being painted for Ethereum. The whale’s 60x leveraged position at such a large size can create extreme levered price movement. Any significant increases would probably trigger a further rush of buying. High-leverage trading is a highly attractive practice, but it is fraught with risk. When there are unexpected market downturns, that can lose a lot of money.
