Bitcoin
$47,154.50-1.15%
Ethereum
$3,306.59-2.60%
XRP
$1.03-4.14%
Cardano
$2.25-4.06%
Polkadot
$33.21-2.33%
Stellar
$0.308696-3.25%
Dogecoin
$0.230316-3.93%
Chainlink
$26.86-3.79%
Uniswap
$23.58-2.29%
Polygon
$1.30-3.95%
Litecoin
$173.29-3.13%
Cosmos
$42.26+7.61%
Bitcoin Cash
$600.71-3.84%
Algorand
$1.96-3.94%
Wrapped Bitcoin
$47,168.96-1.23%
Filecoin
$82.97-0.24%
The Graph
$0.802998-2.42%
Tron
$0.100917-3.13%
Ethereum Classic
$54.72-2.68%
Tezos
$6.26-0.73%
Aave
$335.55-4.49%
NEO
$47.09-3.88%
Monero
$259.24-3.49%
EOS
$4.80-10.02%
IOTA
$1.52-5.75%
BitTorrent
$0.003779-3.11%
Bitcoin SV
$154.30-1.23%
Maker
$2,741.44-2.40%
Waves
$26.79-5.93%
Dash
$188.34-4.18%
Decred
$139.29-0.93%
Decentraland
$0.790317-2.61%
NEM
$0.175800-3.33%
ICON
$1.75-6.94%
Zcash
$131.76-4.15%
OmiseGO
$9.41+9.29%
NuCypher
$0.322691-2.49%
Qtum
$11.92-3.79%
Bitcoin Gold
$63.86-2.33%
Yearn Finance
$32,566.31-2.59%
Basic Attention Token
$0.726400-2.37%
Paxos Standard
$0.994124-0.60%
0x
$1.03-5.60%
Bancor
$3.93-2.48%
Ren
$0.887382-5.24%
Fetch.ai
$0.761415-7.38%
Band Protocol
$8.68-4.72%
Siacoin
$0.017557-6.08%
Kava.io
$5.84-5.44%
Nano
$5.40-1.39%
Loopring
$0.444654-2.34%
Storj
$1.31-5.03%
Lisk
$3.58+0.52%
Numeraire
$45.26-0.55%
Civic
$0.490985-5.71%
Orchid
$0.367400-1.18%
PAX Gold
$1,763.16-0.40%
Augur
$24.99-4.05%
Aragon
$5.87-7.52%
Enzyme
$113.27-9.51%
district0x
$0.173486-0.63%
Kyber Network
$1.72-4.00%
SingularDTV
$0.001440+1.54%
Tether
$1.00-0.01%
USD Coin
$1.00-0.01%
Dai
$1.00+0.00%

Ether Traders May Be Hedging Against DeFi Slowdown: Analyst

Some are calling the white-hot Defi space a bubble that is unsustainable.

Sep 10, 2020 at 11:17 a.m. UTC
Updated Sep 14, 2021 at 9:54 a.m. UTC

Options market data shows increased activity in ether (ETH) puts, or bearish bets. According to one trader, that reflects fears of a drop in prices led by a slump in decentralized finance (DeFi).

  • Ether's put-call volume ratio – a measure of activity in put options relative to calls (bullish bets) – rose to 2.45 on Wednesday.
  • That's the highest level since Oct. 31, 2019, according to data source Skew.
  • In other words, more than two put options were traded against every call option – a sign of bearish market sentiment.

Ether put-call volume ratio

  • "The message between the lines is likely that traders want a hedge [via put options] against the activity in DeFi, which has been the primary driver of ether prices," Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5, told CoinDesk.
  • Indeed, some commentators believe DeFi's staggering growth has become a price bubble and is unsustainable.
  • "DeFi is a rerun of the 2008 asset-backed finance bubble on speed," blockchain consultant Maya Zehavi tweeted on Wednesday.
  • The space faces other issues, too, such as congestion and soaring "gas" fees on Ethereum resulting from heavy network usage by DeFi projects and stablecoins.
  • In August, miners made over $110 million from fees, according to data source Glassnode.
  • Alongside a general crypto market downturn, the total value locked in the DeFi applications has declined sharply from $9.6 billion to $6.11 billion in the past eight days, according to DeFi Pulse.
  • Ether's price fell from $480 to $320 last week.
  • However, investors expect deeper price drops, if any, to be short-lived because call options expiring in three and six months are still drawing higher prices than puts.

Ether put-call skew

  • The one-month put-call skew, which measures the cost of puts relative to calls, is currently seen at 6.8%, indicating an increased demand for bearish put options.
  • But the three- and six-month skews remain well below zero, implying long-term bullish expectations.
  • At press time, ether is trading near $365.

DISCLOSURE

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Loading...