Ethereum ETFs Spur 'Sell The Fact' Concerns, Yet Options Market Reflects Confidence

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Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Positioning in ether's options market counters concerns of a profit-taking-induced price drop following the ETF launch.options listed on Deribit are anticipating positive price outcomes from the expected debut of spot ETH exchange-traded funds in the U.S. on Tuesday.

The bias for call options runs counter to concerns of a typical"sell-the-fact" price response. A sell-the-fact pullback refers to a price drop stemming from early investors taking profits on the occurrence of a highly anticipated event.

There's historical precedent for those concerns. Bitcoin, the leading cryptocurrency by market value, fell 20% in roughly two weeks after spot ETFs began trading on Jan. 11. The cryptocurrency's options market One reason for the call bias on ether ETFs could be that the bar for expected inflows has already been set low. Crypto market maker Wintermutethat inflows over the next 12 months could be 62% less than the $16 billion pulled in by bitcoin ETFs in six months. Similar forecastsBesides, the ETH price has not experienced a significant"buy the rumor" surge leading up to the ETF launch, which weakens the case for a sell-the-fact adjustment.

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