A hidden signal from the derivatus market suggests that ether’s (Eth) Rally could be intensified and raised quickly to $ 4,400.
The considered indicator is the net gamma exposure to dealers/market manufacturers in the market for derived-notified ether opportunities. Gamma is the critical calculation for option dealers who measure how an option’s delta or its sensitivity to the underlying asset price changes in response to market movements.
When dealers are short gamma, they are forced to buy the underlying asset when its price rises and sells when the price drops, which often reinforces directional movements. Dealers deliver the liquidity to the order book and earn money from the Bud-Pask spread, while constantly striving to maintain a price neutral net exposure.
At the time of the press, there was a remarkable building of short gamma between strikes $ 4,000 and $ 4,400, according to data source Amberdata. With Ether Crossing over $ 4,000, dealers could buy the asset to uncover their exposure and create a self-reinforcing positive feedback loop that could quickly propel the price higher to $ 4,400. It is a level where Gamma Dynamic is changing positive, which requires dealers to trade against the market and arrest award volatility.
This makes $ 4,400 a logical price magnet for the ongoing rally.
“If the momentum in the market is strong enough to get through $ 4,000, we see that dealers are also becoming net buyers of ETH at higher prices potentially leading to a quick rally to $ 4,400, the next big Gama Inventory Level said,” Greg Magadini told Derivatives of Amberdata, Coindesk.
