ETH short-term calls explode amid bullish relief across the market. Assessing…

• ETH bulls make a splash after whales ease up on their sell pressure.
• Short-term focus as the market eases off recent FUD.

Ethereum [ETH] bulls are back on top in a surprise move after interfering with a pullback that had the markets concerned about weak demand.

However, current market data suggested that the ongoing upside might be limited. Understanding the reasons for the rally could help gauge the strength of the current bull run.

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ETH and most of the crypto market gained bullish momentum following reports that another bank was at risk of collapse. More so, the price surge was backed by a wave of short-term calls which may offer some insights into what to expect.

In the past hour, ETH has seen over $20 million in Block call option trades, with a high proportion of short-term calls being bought, mainly in giant whale moves. With APR28 approaching, the likelihood of IV declines in the next few days is extremely high. By @GreeksLive

— Wu Blockchain (@WuBlockchain) April 26, 2023

The above findings suggested a high probability that the rally might be short-lived since the short-term calls were focused on short-term profits. But this does not necessarily guarantee that prices will not extend their upside in the short-to-mid-term.

Assessing the likelihood of a strong ETH rally

ETH’s upside will largely depend on whale activity. So what are ETH whales currently up to?

Supply distribution showed a slowdown in sell pressure, especially from some whale categories. This included addresses holding between 10,000 and 100,000 ETH.

This could be considered noteworthy because the aforementioned category controls most of the circulating supply hence it has the biggest impact on price movements.

Source: Santiment

The potential upside may also be limited by some whales that have been taking profits in the last 24 hours. In addition, ETH exchange flows indicated that exchange inflows maintained a dominant position over exchange outflows.

Source: CryptoQuant

The surge in short-term calls reflected the spike in funding rates in the last 24 hours. This confirmed that there was strong demand for ETH in the derivatives segment.

We also saw a drop in leverage in the last few days due to liquidations and market uncertainty. However, the demand for leverage registered a small bounce back in the last 24 hours indicating a return of confidence.

Source: CryptoQuant

A quick look at the price action…

ETH exchanged hands at $1,953 at press time, which represented an 8.29% upside in the last two days. The bullish wave facilitated a healthy bounce after a brief interaction with the 50-day moving average.

Source: TradingView

Realistic or not, here’s Ethereum’s market cap in BTC’s terms

ETH’s MFI maintained a downward trend in the last two days despite the sharp bounce back in the last two days. This lends credence to the expectations of a limited upside.

However, investors should also note that the unexpected may also happen just as has been the case with the sudden pivot. ETH and other top cryptos may continue rallying higher if another banking contagion ensues.