Analyst Valentin Fournier has forecasted Ethereum Price fluctuations following the debut of several spot Ethereum ETFs. According to data from the Chicago Board Options Exchange, spot Ethereum ETFs are set to begin trading this Tuesday. Fournier suggests that the anticipated increase in trading activity comes with both opportunities and risks.
Volatility Expected with ETF Launch
As the market braces for the launch, ether options have seen a notable rise in implied volatility from 56% to 70% over the past week, reflecting the market’s uncertainty. Volatility increase in the derivatives market precedes price movements, drawing keen attention to recent developments.Â
The launch of Ethereum ETFs by fund managers like Fidelity, Franklin Templeton, and VanEck will consequently boost market liquidity and volatility.
Moreover, the current distribution of ether options indicates a cautious stance among traders. The put-call ratio has spiked to 1.45, signaling a defensive posture with more traders holding put options relative to call options. This setup points to widespread expectations of initial downward price movements, as traders hedge against potential declines.
Gradual Recovery Anticipated
Despite the forecasted initial sell pressure, Fournier remains optimistic about Ethereum’s price trajectory in the medium term. He predicts that after potential dips to levels between $2,800 and $3,100, the price should recover, climbing toward $4,000. This recovery will likely be fueled by the growing demand for spot ETFs, which could stabilize the market after initial fluctuations.
Additionally, as the week progresses, the focus will shift towards the upcoming options expiry on Friday. Market participants are positioning for an increase in ether’s price, with a significant concentration of open interest around the $3,700 strike price. This bullish stance suggests that many traders expect the price to rise above this level by the expiry date.
Market Outlook
Looking forward, the Ethereum market presents a complex landscape of risks and opportunities. While immediate fluctuations are likely, the broader implications of increased ETF activity could boost Ethereum’s position in the investment community.
Moreover, Fournier advises maintaining exposure to Ethereum while observing market dynamics closely. He notes that while the enthusiasm for Ethereum is high, the seasoned market presence of Bitcoin may still overshadow the newer entrant.
While initial volatility is anticipated, the long-term outlook suggests that Ethereum will continue to be a key player in cryptocurrency investments.
Also Read: Ethereum ETFs Slash Fees as Competition Heats Up Before Listings
