A hidden signal of the derivative market suggests that Ether’s (Eth) Rally could be intensified, rapidly raising at $ 4,400.
The indicator under consideration is the net gamma exposure of the market concessionaires/manufacturers in the prey ether options. Gamma is the critical metric for options of options, which measures how the delta of an option or its sensitivity to the price of the underlying asset, changes in response to market movements.
When the dealers are short gamma, they are forced to buy the underlying asset as their price increases and sells as its price falls, which often amplifies the directional movements. The concessionaires provide liquidity to the order book and earn money with the offer and constantly strive to maintain a net exposure to the neutral price.
At the time of publication, there was a remarkable accumulation of short gamma between strikes $ 4,000 and $ 4,400, according to the Amberdata data source. With an ether crossing above $ 4,000, distributors could buy the asset to cover their exhibition, creating a self-conforing positive feedback cycle that could quickly boost the price at $ 4,400. That is a level in which Gamma dynamics change positively, which requires distributors to trade against the market and stop pricing volatility.
This makes the $ 4,400 a logical price magnet for the current rally.
“If the impulse in the market is strong enough to spend $ 4,000, we see that the concessionaires also become net buyers of ETH at higher prices, which can lead to a rapid recovery at $ 4,400, the next level of inventory of the Big Gama range,” said Greg Magadini, director of Amberdata derivatives, to Colesk.
