Not $10k, Ethereum(ETH) Price Hit To This Level By the End of 2022?

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Three Arrows Capital’s co-founder released interesting data indicating that someone has initiated a big bet on Ethereum dec2022 calls, implying that Ethereum will hit $7,000 (strike price) by the end of the year.

Professional traders favour options because they allow them to make a large profit in a short amount of time. A large call on a price increase is frequently part of a hedge position opened at the same time as a short order.

Despite the fact that options are frequently used as a hedging strategy, it is unlikely that this is the case in this situation because the original short position would be large; traders typically use roughly 5% of the initial position for hedging.

The initial stake would have been roughly $36 million in this situation, which would have been recognised by market watchers.

Insider trading or a strong belief in the second largest cryptocurrency on the market could explain why such a massive position was opened. Options contracts, on the other hand, are sometimes used as trading instruments by traders.

When the price of the underlying asset approaches the striking price, for example, the price of each call contract rises. Even if Ethereum does not hit $7,000, the value of a trader’s contract will climb exponentially in this instance.

Unfortunately, Ethereum failed to offer a strong performance at the start of 2022, and it now has a 36 percent loss from the end of 2021.

Ethereum Price Analysis

The price of Ethereum began to fall sharply against the US Dollar, starting around $3,180. To avoid a trend change in the near term, ETH bulls must defend the $2,950 support.

Ethereum made a strong push above the $3,150 resistance level. However, ETH was unable to gain traction over $3,150, forming a short-term top near $3,180.

At $3,179, a peak was made, and the price began to fall sharply. If ethereum fails to gain traction beyond $3,000, it may continue to decline.

The $2,950 level is the first important support. If the price breaks below the $2,950 support, the price could fall much faster. The next important level of support is at $2,880.