Trading Strategy When Ethereum becomes Bullish

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Bittime - People who are optimistic about Ethereum can trade conservatively using this options strategy. Traders who believe that ETH will reach $5,000 can utilize this low-risk options strategy to place a long bullish bet.

Optimism about Ethereum

Recently, being bullish on Ether has been rewarding as its value has surged 60% in the past month. The significant growth of decentralized finance (DeFi) applications likely caught the attention of institutional investors, and the recent London hard fork implemented changes that reduced daily issuance of new Ether.

Although Ether is not yet a fully deflationary asset, the upgrade paves the way for Ethereum 2.0 (Eth2), and the network is expected to switch to a proof-of-stake consensus mechanism soon. This transition could make Ether slightly deflationary as long as transaction fees remain high enough and the amount of Ether staked is large enough.

Ethereum Upper Limit

Despite many predictions that Ether will surpass $5,000, it seems unlikely to experience a 90% increase from its current level of around $3,300 before the end of the year.

Prepare a Plan for Negative Market Reactions

It is wise to prepare for a potential negative cryptocurrency market reaction to proposed regulations, such as those proposed by United States Representative Don Beyer.

The proposal “The Digital Asset Market Structure and Investor Protection Act of 2021”, although still in its early stages, aims to establish regulatory requirements for all digital assets and digital asset securities under the Bank Secrecy Act, classifying them as “monetary instruments”.

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Minimizing Losses while Maximizing Profits

To minimize losses while still having the potential for significant profits, it is recommended to adopt a strategy that can generate profits of up to $5,000 by the end of the year while limiting losses to under $2,500. 

A suitable option for this is the “Iron Condor” option strategy, which is slightly adjusted for positive results.

Buy and Sell Options 

Call Options give buyers the right to purchase an asset at a set price in the future, for which they pay an upfront fee. In contrast, selling a call option is betting against the asset price.

Put Option

Put Options allow buyers to sell an asset at a set price in the future, serving as a hedge against losses. 

In contrast, selling a put option is betting on an increase in the price of an asset.

Iron Condor Strategy

With Iron Condor, one sells a call option and a put option at the same price and expiration date. The potential profit is 2.5 times greater than the possible loss. 

To initiate a trade, one simultaneously sells 0.50 of the $3,520 call option and put option contracts, and repeats the process for the $4,000 option. As a precaution against extreme price movements, a protective put at $2,560 was used.

Therefore, depending on the price paid for the remaining contracts, 1.47 contracts would be required.

Source

If the price of Ether spikes above $7,000, traders will need to purchase 0.53 call option contracts to limit potential losses from this strategy.

While this example aims for a maximum profit of 0.295 ETH and a potential loss of 0.11 ETH, most derivatives exchanges accept orders as low as 0.10 contracts.

This strategy produces net profits if Ether trades between $2,774, which is 10.5% lower than the current price of $3,100, and $5,830

Using this slightly adjusted Iron Condor strategy, an investor can make a profit as long as Ether's price increase remains below 88% at the end of the year.

How to Buy Crypto on Bittime

You can buy and sell crypto assets in an easy and safe way via  Bittime .  Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti. 

To be able to buy crypto assets on  Bittime ,  make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into  your wallet . For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application. 

Learn  Complete Guide How to Buy Crypto on Bittime .

Monitor price chart movements  for Bitcoin (BTC) ,  Ethereum (ETH ) ,  Solana (SOL)  and other cryptos to find out today's crypto market trends in real-time on Bittime.

Also Read

What is Consolidation in Crypto Trading?

What is Bullish Divergence in Crypto Trading?

What is a Margin Call?

DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.