Analysis: Options market reflects possible profit-taking for ETH at $4,000 and BTC at $120,000

PANews July 28 news, Singapore crypto investment institution QCP Capital published an article saying that Ethereum has risen rapidly, approaching the $4,000 mark for the first time since December last year. As the inflow of funds into the spot ETH ETF has exceeded Bitcoin for the seventh consecutive day, the market's attention to Ethereum continues to heat up. Given that Ethereum's market value is still only one-fifth of Bitcoin, the scale of institutional and corporate treasury funds required to drive its price increase is much smaller. Although Ethereum has become the focus of the media recently, Bitcoin has shown strong resilience. Although the inflow of funds into the spot Bitcoin ETF has slowed down, its price trend remains strong. Even though a long-term holder sold 80,000 bitcoins last Friday, the market quickly digested the impact, and traders rushed to buy at a low price, smoothing out the short-term surge in volatility.

BTC's market value share is stable at around 60%, indicating that the market still regards it as the first choice for value storage, rather than a full shift to altcoins. When ETH hit a record high in November 2021, BTC accounted for less than 45% and ETH was close to 20%. The current pattern shows that mainstream altcoins still have room for growth. Short-term risk indicators show that the market is overheated: BTC and ETH perpetual contracts have open interest of $45 billion and $28 billion, respectively, at a one-year high; the funding rates of major exchanges are all over 15%. Some large investors have taken profits, including closing out ETH September-expiring call option butterfly combinations and buying BTC August-expiring large put options to hedge downside risks. The options market reflects that ETH may face profit-taking at $4,000 and BTC at around $120,000. However, considering the market momentum, narrative heat and macroeconomic support, if there is a pullback, institutions and long-term holders may continue to buy on dips.