Traders have begun preparing for Ethereum's Pectra upgrade, raising questions about whether the historical idea of 'buy the rumor, sell the news' will play out again. Currently, if the test nets scheduled for February 24 and March 5 proceed as planned, the upgrade is set for early April.
According to the cryptocurrency options trading department QCP Capital, as of the time of writing, traders' positions tend to favor this bullish strategy. The company points out that
"Traders are preparing for another volatility event, with volatility expected to skew bullish starting March 28. This could lay the groundwork for the next major positioning theme.
Will Pectra upgrade ETH?
QCP Capital adds that previous upgrades have always been sold off before the event occurs. The only exception is the Shanghai upgrade in April 2024. The company emphasizes that
"Merge (September 2022) → Classic 'buy the rumor, sell the news'. ETH rebounded over 100% from the June low, followed by a sell-off after the event. Shanghai (April 2023) → The market worried about oversupply, but when the sell-off pressure failed to materialize, ETH rose 30% in the following months.
For those unfamiliar, the Pectra upgrade aims to provide 11 key features, including blob extension and smart wallet functionality.
The aforementioned scalability efforts are also beginning to bear fruit. For example, recently, Ethereum's average transaction cost is comparable to Solana, with gas fees below 1 gwei.
However, despite these efforts, the demand for L1 has not significantly increased. Therefore, whether the Pectra upgrade will accelerate L1 demand remains to be seen.
Can ETH recover to $4,000?
That said, in the past 24 hours, call options (bullish bets) with target prices of $32,000 and $30,000 have been the most purchased.
To protect themselves, put options (bearish bets) are stacked at the $2,000 target. This indicates that options traders expect a price surge to $3,200 in the short term, with $2,000 as support after an extremely bearish trend.
However, the options market is relatively less optimistic about ETH reaching $4,000 by the end of April following the Pectra upgrade.
As of the time of writing, traders believe the possibility of the king of altcoins returning to $4,000 is only 14%. The probability of reaching $4,000 by June jumps to 25%, indicating a higher chance for the altcoin to achieve this level during the summer.
Increase in ETH accumulation
Despite the lackluster price movement of ETH, the accumulation of ETH has become quite substantial as investors move ETH off exchanges.
On just one day, February 5, 367,000 ETH were moved off exchanges—indicating that the altcoin is showing a strong accumulation trend as it breaks below $3,000 on the charts.
Whether the strong accumulation trend will drive up the price of ETH will depend on the improvement of broader market sentiment.