Volume of ETH Options Rises to Highest Level

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Last Updated on March 31, 2023 by Bitfinsider

Traders are betting on Ethereum, as the monthly volume of ETH futures in March hit its highest level since May 2022, according to The Block data.

The increase is being driven in part by the upcoming Shanghai-Capella upgrade, or Shapella, which will allow staked ether withdrawals for the first time, among other technical upgrades, on April 12.

The ability to withdraw staked ether is important because it gives validators easier access to their funds, increasing liquidity while increasing the number of validators on the network.

Following “The Merge,” when Ethereum transitioned from a proof-of-work network to a proof-of-stake network, the minimum amount of ETH needed to participate in staking rewards as a validator was 32 ETH, which was close to $128,000 at the time. Validators were unable to use funds for other reasons because they were “locked up.” Nonetheless, the Ethereum network presently has around 560,000 validators.

Allowing staked ether withdrawals will make it simpler for individuals and groups to participate in the network. With a clearer path to withdrawal, more people will be ready to participate as validators, increasing the network’s security.

Traders are betting on the future price of Ethereum ahead of the upgrade, with open interest for ether options on CME hitting all-time highs this month. The volume of completed trades for Ethereum options lags behind, indicating that traders are stockpiling contracts in expectation of the update, betting on which way the price will swing.

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