Ether Has 1 in 5 Chance of Tapping $5K by End-June, DeFi Options Protocol Lyra Says

Traders on Lyra have snapped up ether calls at the $5,000 strike and higher this week.

AccessTimeIconMay 22, 2024 at 10:56 a.m. UTC
Updated May 22, 2024 at 10:58 a.m. UTC
  • There is a 20% chance of ether rallying as high as $5,000 by the end of June, according to dominant DeFi options protocol Lyra.
  • Traders have snapped up ether calls at the $5,000 strike and higher this week.

The price of ether (ETH) has a 20% chance of rallying to $5,000 by the end of next month, data from the decentralized options marketplace Lyra indicates. The price peaked at $4,692 during the previous bull market, according to CoinDesk data.

To hit the new record, ether would need to rise by about a third from the current level around $3,740. That would follow this week's more than 20% surge spurred by sudden optimism that the U.S. Securities and Exchange Commission (SEC) will approve spot ETH exchange-traded funds (ETFs).

"Lyra options markets are implying a ~20% chance of ETH reaching $5,000 by June 28," Nick Forster, Lyra's founder and a former Wall Street options trader, told CoinDesk in an email. "There is a 20% chance of ETH moving above $5,500 by July 26, as traders have increased positioning post the ETF speculation."

Lyra is a decentralized settlement protocol for spot, perpetuals and options trading. In the past 24 hours, the protocol registered a crypto options trading volume of $1.33 million, accounting for over 50% of the global decentralized finance (DeFi) options tally of $2.08 million, according to data source DeFiLlama. Traders from Lyra correctly predicted BTC's first-quarter rally and the April peak near $70,000.

Options are derivative contracts that give their holders the flexibility to buy or sell the underlying asset in the future at a price agreed upon today. A call gives the right to buy, and a put option offers the right to sell. Traders typically buy call options to profit from or hedge against price rallies and prefer puts when anticipating a price drop.

This week, Lyra-based traders have snapped up ether call options expiring in June and July at strikes above $5,000, revealing a bullish outlook.

“The ETH ETF approval should have an outsized effect on ETH relative to Bitcoin. ETH is starting from a market cap that is roughly one-third of what Bitcoin's was prior to the ETF being priced in," Forster said. “This should drive more volumes to options as traders play the ETF approval event and position for volatile markets without being subject to liquidation (on the long side)."

The bias for calls on Lyra is consistent with the activity on leading centralized exchanges like Deribit.

Edited by Sheldon Reback.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.