Research Summary
The report discusses the potential downside of Ethereum (ETH) prices despite the approval of Spot Ethereum ETFs. It suggests a Put Butterfly strategy for traders expecting a downward movement in ETH prices. The report also provides a detailed insight into the performance of crypto products after their listings, highlighting a pattern of corrections following the listing of regulated exchange products.
Key Takeaways
Ethereum Market View
- ETH Prices Not Surging: Despite the approval of Spot Ethereum ETFs, ETH prices have not surged. The put-call ratio suggests potential downside, indicating a higher number of put options relative to call options. Traders are either expecting an immediate downside or seeking to hedge against price declines.
- ETH Underperformance: Compared to other cryptocurrencies, ETH has underperformed on a weekly basis in terms of market cap.
Put Butterfly Strategy
- Strategy Proposal: The report proposes a Put Butterfly strategy for traders expecting a downward movement in ETH prices. This strategy involves buying one Put at a higher strike price, selling two Puts with a lower strike price, and buying one Put with an even lower strike price.
- Trade Structure: The report provides a specific trade structure for executing this strategy, with a target spot level of $3,300. The maximum profit from this strategy is $90.5/ETH, with a debit of $9.5/ETH.
Historical Performance of Crypto Products
- Post-Listing Corrections: The report highlights a pattern of corrections following the listing of regulated exchange products. This pattern was observed with the CME Bitcoin Futures launch in December 2017, the Coinbase IPO in April 2021, the Bitcoin ETFs based on futures in October 2021, and the Bitcoin ETFs based on spot in January 2024.
Actionable Insights
- Consider Put Butterfly Strategy: Traders expecting a downward movement in ETH prices can consider executing a Put Butterfly strategy. This involves buying and selling Puts at different strike prices, with a target spot level of $3,300.
- Monitor ETH Market: Traders should closely monitor the ETH market, particularly the put-call ratio, as it can indicate potential price movements. A higher number of put options relative to call options can suggest potential downside.
- Study Historical Performance: Traders can gain insights by studying the historical performance of crypto products after their listings. Understanding the pattern of post-listing corrections can help in making informed trading decisions.
