Ether call buyers are showing optimism in the market despite recent declines. This trend suggests a potential bullish outcome in a falling market, as traders place bets on Ethereum’s native token.

Ether’s Recent Performance

Ethereum’s native token, Ether (ETH), has dropped over 5% to $3,350 in one week. This decline follows speculation about Ether ETFs possibly trading in the U.S. soon and mirrors weakness in Bitcoin and other cryptocurrencies.

Call Options Activity

Despite the drop, some traders are buying large numbers of Ether September expiry call options at a $4,000 strike level on Deribit, a crypto exchange. A call option allows the holder to buy the underlying asset at a specific price within a set time frame. Purchasing call options indicates an expectation that the asset’s price will rise above the strike price.

Bullish Sentiment Among Traders

Greg Magadini, director of derivatives at Amberdata, noted significant buying activity for the September $4,000 calls. This activity suggests that traders believe if ETH surpasses $4,000, it might test and break new all-time highs. Block trades, typically negotiated privately between two parties and listed on an exchange, are often preferred by institutional investors, hedge funds, and large market participants.

Historical Context and Regulatory Impact

Ether, launched in 2015, reached a record price of over $4,800 in November 2021. While Bitcoin surpassed its 2021 highs earlier this year, Ether has only briefly topped $4,000 due to regulatory uncertainty. However, the U.S. Securities and Exchange Commission (SEC) has recently set the stage for a spot Ether ETF approval, removing significant regulatory uncertainty. Bloomberg’s ETF analyst Eric Balchunas expects Ether ETFs to start trading in the U.S. on July 2.

Market Expectations

Traders buying $4,000 calls may anticipate significant price movements once the ETFs are live. This bullish sentiment aligns with the increased volatility expectations in the Ether market. However, some observers, including JPMorgan, remain cautious.