Despite the fact that the Ethereum platform has existed mostly in the shadow of Bitcoin, it has managed to spearhead several independent altcoin rallies. Throughout the year, Ethereum has shown sharp price movements with respect to Bitcoin and according to the latest development, volatility is coming back to Ethereum.
This was noted by the crypto research firm Coin Metrics in the latest edition of the State of the Network report which stated that the reason for this is primarily because of the surprise launch of Uniswap’s governance token ‘UNI’ on Ethereum mainnet and the heightened sell pressure that has overpowered the market.
However, since mid-2019. the volatility has been considerably low as compared to previous levels partly due to the foray of new market participants as well as the maturity of the crypto space. But there has been a turn of events as volatility seemed to have made a comeback one again. The report mentioned,
“This is significant because it follows a period of sustained levels of low volatility not seen since mid-2019. This increase in volatility precedes some significant events, namely the launch of the first phase of ETH 2.0 and, more urgently, the September 25th options expiration.”
As Ethereum 2.0’s much-anticipated move to Proof-of-Stake gets closer, the volatility of the crypto-asset is bound to have some effect. TWJ had previously reported that this has led to the increased development activity on Github which rose to a 7-months high.
Friday could be a big day for the ETH market
But this isn’t the only factor that has propelled a rise in volatility. On the derivatives front, Ethereum also has a record-breaking 460,000 ETH options expiring this Friday, on the 25th of September. A huge chunk of which, more specifically 90% of the expiring Ether options are held on derivatives platform Deribit.
UPCOMING BIG QUARTERLY EXPIRY! 💣
🔹 87k $BTC options are set to expire this Friday of which 67k (77%) is held at Deribit.
This number beats August’s record of 65k $BTC options!
🔹 459k $ETH options are set to expire this Friday of which 414k (90%) is held at Deribit pic.twitter.com/ALkVOSwY7u
— Deribit (@DeribitExchange) September 21, 2020
According to the report, this event is likely to add additional volatility to ETH’s price movement throughout the week, “as traders look to hedge exposure on these positions, work out of them, or possibly take action in the spot market in anticipation”.