Ether Has 1 in 5 Chance of Hitting $5K by June 28, Lyra Says Amid ETF Optimism

Ether surges 17% to $3,600 with 1 in 5 chance of hitting $5K by June amid ETF optimism.

By Bill Bullington

5/22, 08:15 EDT
Bitcoin / U.S. dollar
Coinbase Global, Inc.
Robinhood Markets, Inc.
Marathon Digital Holdings, Inc.
Riot Blockchain, Inc

Key Takeaway

  • Ether (ETH) has a 20% chance of reaching $5,000 by June 28, driven by optimism over potential SEC approval of spot ETH ETFs.
  • Lyra options traders have increased positions in call options expiring in June and July at strikes above $5,000.
  • Lyra registered $1.33 million in crypto options trading volume within 24 hours, accounting for over 50% of global DeFi options activity.

Ether ETF Optimism Drives Market Surge

Ether (ETH) has experienced a significant rally, opening the Asia business day trading above $3,600, marking a 17% increase. This surge is largely attributed to favorable regulatory developments that have heightened the likelihood of an ether exchange-traded fund (ETF) being approved soon. CoinDesk reported that the U.S. Securities and Exchange Commission (SEC) has made abrupt progress by asking exchanges to update 19b-4 filings for ether ETFs, which propose rule changes. This move suggests potential progress toward spot Ether ETF approvals, although the SEC could still reject the S-1 registration statement, delaying the ETF's approval and trading commencement.

Market Reactions and Volatility

The news of potential Ether ETF approval has had a profound impact on market sentiment. The CoinDesk 20, a measure of the performance of the market's largest digital assets, is up almost 8%. Ether's implied volatility curve has flattened, with 25-delta risk reversals hitting year-to-date highs above 18%. Traders have been heavily buying $4,000 calls for May 24 and May 31, 2024, according to Presto Research analysts. Polymarket contracts also reflect increased optimism, with a contract asking if an ether ETF will be approved by May 31 jumping from 10 cents to 55 cents, representing a 55% chance of approval. Another contract asking if the ETF will be approved by June 30 is currently trading at 68%.

Broader Market Impact

The speculation around spot-Ether ETFs has led to a broader market rally. Ether rose almost 14% in U.S. trading, the steepest advance since November 2022, and continued to gain in Asian hours, reaching $3,666 as of 9:33 a.m. in Singapore. Bitcoin also climbed, nearing its mid-March all-time peak of nearly $74,000. Crypto-related equities have benefited as well, with Coinbase and Microstrategy each gaining about 2% in extended trading, and Robinhood adding 3%. Several bitcoin mining stocks, including Marathon Digital, Riot Platforms, Iren, and CleanSpark, saw gains of 3%.

Street Views

  • Nick Forster, Lyra (Bullish on Ether):

    "Lyra options markets are implying a ~20% chance of ETH reaching $5,000 by June 28. There is a 20% chance of ETH moving above $5,500 by July 26, as traders have increased positioning post the ETF speculation."
    "The ETH ETF approval should have an outsized effect on ETH relative to Bitcoin. ETH is starting from a market cap that is roughly one-third of what Bitcoin's was prior to the ETF being priced in. This should drive more volumes to options as traders play the ETF approval event and position for volatile markets without being subject to liquidation (on the long side)."