Big Moves Expected for March in Ethereum: Is it a Drop or a Rise? - Coin Bulletin

While Ethereum (ETH) price experienced sharp fluctuations this week, expectations of a decline in the options market are strengthening. Traders believe that with increasing volatility, the price could show larger movements in March.

Important developments have occurred in the Ethereum market this week. Price volatility suddenly surged, catching option traders unprepared. This situation prompted investors to adopt more cautious strategies to mitigate their risks. The volatility seen in the options market indicates increased uncertainties in the short term for the ETH price.

The sudden movements in the price of ETH and their impact on the options market

Cryptocurrency derivatives market expert Gordon Grant noted that the increase in volatility in the Ethereum options market is remarkable. Grant stated that after the expiration of the options, there was a "gamma shortage" in the Ethereum market, which further intensified price fluctuations. **Normally, with the effect of collateral entering the market after the expiration, a decrease in short-term volatility is expected, but this time the opposite happened and the volatility rapidly increased.

Implied volatility on weekly options for Ethereum has surged above (IV), indicating that price movements of up to 4% daily are expected in the market. However, this suggests that investors are using options as insurance against price declines rather than as a speculative tool.

Concerns about a decline in March are growing stronger

One of the significant changes in Ethereum's options market was the inversion of the futures curve and the implied volatility of at-the-money (ATM) options rising from 60% to 70%. This data indicates that as the Ethereum price drops, the volatility increases further.

However, the (skew) increase in one-month option skews indicates an increased need for investors to hedge downside risks. Grant noted that this particularly strengthened the downward trend in the options market and led investors to adopt more defensive strategies.

Traders have shifted to a defensive position

Instead of buying a direct sales option in the options market, investors have started to prefer the more cost-effective 'put spread' strategy. This method provides investors with the opportunity to hedge at a lower cost, while clearly indicating the expectation of a decline.

However, it is still uncertain when the market will reach a balance. According to Grant, there may be a need for further increase in demand for put options. Traders will seek more assurance before considering that the Ethereum price has reached its lowest level.

Current volatility levels indicate that a 14% move in Ethereum's price is seen as a balance point in the options market. This also indicates that investors do not expect a significant surge in ETH price in the coming weeks, but rather are developing hedging strategies against the downward trend.

Critical levels for Ethereum

The Ethereum price is currently stuck between important support and resistance levels. The 5-day moving average levels indicate a continuing downward trend, while the 14-day RSI data also points to an market approaching the oversold zone.

March could be a defining period for Ethereum. The market is seeking direction based on both option data and technical analysis.