ETH Options Traders Embrace Bullish Positioning for Pectra Upgrade

Traders have begun positioning for Ethereum’s Pectra upgrade, raising questions about whether the historical “buy the rumor, sell the news” idea will play out again. The upgrade is scheduled for early April if the testnets set for 24 February and 5 March go as planned.

According to the crypto options trading desk QCP Capital, traders’ positioning leaned on this bullish play. The firm noted:

> “Traders are positioning for another volatility event, with volatility skewed in favor of calls from March 28 onward. This could set the stage for the next major positioning theme.”

Will Pectra Upgrade Pump ETH?

QCP Capital added that previous upgrades have always been front-run before sell-offs after the events, with the exception of the Shanghai upgrade in April 2024. The firm highlighted:

> “The Merge (Sep 2022) → Classic ‘buy the rumor, sell the news’. ETH rallied over 100% from June lows before selling off post-event. Shanghai (Apr 2023) → Markets feared excess supply, but when selling pressure failed to materialize, ETH climbed 30% in the following months.”

For those unfamiliar, the Pectra upgrade aims to ship eleven key features, including blob expansion and smart wallet capabilities.

The aforementioned scalability efforts have begun to pay off too. Recently, Ethereum’s average transaction cost has been rivalling Solana with sub 1 gwei in gas charges. However, despite these efforts, a notable uptick in demand for L1 has not occurred, leaving uncertainty about whether the Pectra upgrade will accelerate it.

Will ETH Reclaim $4k?

In the last 24 hours, calls (bullish bets) focused on the $3.2k and $3k price targets were the most purchased, while puts (bearish bets) were added at the $2k target. This suggests that options traders expect a surge to $3.2k, with $2k as support amidst bearish moves.

However, the options market was less optimistic about ETH hitting $4k by the end of April. At press time, traders were pricing a 14% chance of reclaiming $4,000, with June odds at 25%, indicating a better chance of reaching that level in the summer.

Hike in ETH Accumulation

Despite ETH’s muted price action, significant accumulation has been observed as investors moved ETH off exchanges. On 5 February, for example, 367k ETH were moved from exchanges— a sign of a strong accumulation trend as the altcoin dropped below $3k on the charts. Whether this accumulation will propel ETH’s price higher will depend on improvements in broader market sentiment.