Share this article
Ether's $3K Breakout Partly Fueled by Dealer Hedging, Analyst Says
Options dealers likely bought ETH in spot/futures market to hedge their short positions in call options, adding to bullish momentum, BloFin's Griffin Ardern said.
Updated Mar 8, 2024, 9:58 p.m. Published Feb 22, 2024, 1:35 p.m.
- Options dealers likely bought ETH in spot/futures market to hedge their short bets in call options, adding to bullish momentum, BloFin's Griffin Ardern said.
- A similar pattern played out in the bitcoin market in November, accelerating price gains above $36,000.
Dealer hedging, a market dynamic that accelerated bitcoin's uptrend in late 2023, is now influencing ether's price.
Ether, the native token of Ethereum’s blockchain, peeped above $3,000 early Thursday. The breakout above the psychological barrier was partly aided by the hedging activities of market makers or dealers from the ether options market, according to Griffin Ardern, head of options trading and research at crypto financial platform BloFin.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
Per Ardern, dealers or entities tasked with providing liquidity to order books recently sold many calls or bullish bets at $3,000, leaving them with a so-called negative gamma exposure. So, as ether rallied close to the said level, dealers bought ether in the spot/futures market to hedge upside risks and keep their overall market exposure direction neutral. The hedging activity added to the bullish momentum, lifting ether past $3,000.
A similar pattern played out in the bitcoin market in November, accelerating price gains above $36,000.
Market makers are entities tasked with providing liquidity to the order book. They are always on the opposite side of clients' trades and constantly buy and sell the underlying asset to maintain an overall market-neutral book.
"A large amount of negative dealers' gamma is concentrated around $3,000, so market makers need to hedge the risk here. Negative gamma means that the market maker sold many calls at the $3k strike," Ardern told CoinDesk. "To deal with this, market makers must trade in the direction of the price move – buy ether as prices rise."
"The hedging program took effect at around 6:48 a.m. UTC early today," Ardern added.
Ether topped $3,000 at around 08:55 UTC, rising to a high of $3032 by 09:50 UTC, data from charting platform TradingView show.
Back in mid-2023, market makers in both BTC and ETH options markets held a positive gamma exposure and constantly traded against the price direction, thereby arresting price volatility.
Dealer activity, however, became a positive force for bitcoin in the final quarter as ETF optimism fueled investor demand for calls, exposing market makers to price rallies. More recently, Ethereum's impending Dencun upgrade and spot ETF narrative have done the same in the ether market.
More For You
KuCoin captured a record share of centralised exchange volume in 2025, with more than $1.25tn traded as its volumes grew faster than the wider crypto market.
What to know:
- KuCoin recorded over $1.25 trillion in total trading volume in 2025, equivalent to an average of roughly $114 billion per month, marking its strongest year on record.
- This performance translated into an all-time high share of centralised exchange volume, as KuCoin’s activity expanded faster than aggregate CEX volumes, which slowed during periods of lower market volatility.
- Spot and derivatives volumes were evenly split, each exceeding $500 billion for the year, signalling broad-based usage rather than reliance on a single product line.
- Altcoins accounted for the majority of trading activity, reinforcing KuCoin’s role as a primary liquidity venue beyond BTC and ETH at a time when majors saw more muted turnover.
- Even as overall crypto volumes softened mid-year, KuCoin maintained elevated baseline activity, indicating structurally higher user engagement rather than short-lived volume spikes.
More For You
Strategy shares register first six-month losing streak since adoption of bitcoin strategy in 2020
Crypto analyst Chris Millas has highlighted an unusually persistent slump in Strategy shares, breaking with past drawdown patterns even as the firm continued accumulating bitcoin.
What to know:
- Strategy shares fell in each of the final six months of 2025, marking the first time since the firm adopted bitcoin in August 2020 as a treasury reserve asset.
- The decline stands out for its persistence, as past selloffs were often followed by sharp rebounds.
- The stock sharply underperformed both bitcoin and the Nasdaq 100 despite the firm's continued BTC purchases.
Top Stories
