During the rapid crypto market growth in the first half of 2021, hyperbolic bets on BTC and ETH often crossed the line on one of the largest cryptocurrency options exchanges Deribit. After two years, we observe the opposite phenomenon, when market participants bet on a prolonged fall in Ethereum.
Last week, an order for the purchase of 50,000 ETH option contracts with a strike price of $400 appeared on the list of Deribit orders, with an expiration date in early summer, which caused unrest in the crypto community. At the time of placing the order, the cost of ETH was about $ 1300, which means the buyer’s expectations for a reduction in the current price by almost 70% in six months.
The “put” option gives the buyer the right to trade the underlying asset at a predetermined price on a certain date or earlier.
Against the background of exciting news, Patrick Chu, director of institutional sales and trading at Paradigm, said that if the buyer is ready for the deal, he will still have to wait until the price drops below $400.
By the beginning of this week, this order was partially executed for 40,000 contracts. The buyer paid a premium of 0.0095 ETH for the contract, resulting in total costs of 380 ETH or $494,000.