Derivatives Signal Highlights Potential for Rapid Ether Rally to $4,400
A less obvious but powerful indicator from the ether options derivatives market points toward a possible swift price rally, potentially pushing ETH to $4,400.
The key metric driving this outlook is the net gamma exposure of market makers in the Deribit ether options market. Gamma measures how much an option’s delta—the sensitivity to price changes in the underlying asset—shifts as the market moves.
When dealers hold a short gamma position, they’re forced to buy ETH as its price rises and sell when it falls, often amplifying price movements. These dealers provide liquidity, profit from bid-ask spreads, and strive to keep their net exposure neutral.
Recent data from Amberdata shows a buildup of short gamma between strike prices of $4,000 and $4,400. With ETH now trading above $4,000, dealers may increase their ETH purchases to hedge their positions, creating a feedback loop that could push prices swiftly higher. Once ETH nears $4,400, the gamma exposure flips positive, prompting dealers to trade against the trend and stabilize volatility.
This dynamic suggests $4,400 could serve as a significant price magnet during the rally.
Greg Magadini, Amberdata’s derivatives director, told CoinDesk, “If ETH momentum breaks through $4,000, dealers typically become net buyers at higher levels, possibly leading to a quick surge toward $4,400, which is the next key gamma inventory level.”
