Gate Institute: ETH's upside potential may be limited, and the strategy shows a bearish bias

Market Overview

Over the past week, BTC has formed effective support around 90,000, showing an overall oscillating correction trend. The price has re-claimed the MA5 and MA10, but remains constrained above the MA30 (around $95,100). Trading volume is insufficient, indicating that the current rebound is mainly a technical correction, with clear ongoing battles between bulls and bears. Overall, short-term sentiment has improved, but to confirm a strong trend, increased volume and a decisive break through key moving averages are still needed.

Options Market Dynamics

Latest data shows that BTC implied volatility (IV) remains at 41%, while ETH IV stays at 57%. Notably, ETH IV has fallen to the 0.8% percentile over the past year, indicating that the options market is extremely cautious about short-term price fluctuations.

In the past week, the 25-Delta Skew for BTC and ETH, after a rapid increase in defensive sentiment, quickly recovered. The 7D Skew rebounded sharply after a steep decline, reflecting the fading of short-term panic and a stabilization of sentiment; medium- and long-term Skew remains somewhat negative but with limited volatility, indicating ongoing long-term defensive demand that has not further deteriorated.

BTC’s actual volatility has risen and stabilized between 30–33%, while short-term ATM implied volatility has fallen from high levels to around 35%, leading to a significant convergence of the IV–RV gap and rapid compression of VRP. This suggests that the market’s pricing of short-term sharp fluctuations has cooled, increasing the importance of structural and directional strategies. Meanwhile, ETH shows a pattern of declining IV and rising RV, with VRP shrinking significantly. Although there is some minor hedging recovery at the end, overall, volatility premiums are weakening, and pricing has become more restrained.

Block Trades Structure

In the past week, the options markets for BTC and ETH have mainly seen block trades involving Risk Reversal strategies. On Friday, approximately $2.6 billion worth of BTC and ETH options will be settled. The largest block trades are as follows:

• BTC: Buying BTC-300126-98000-C, with approximately 2,525 BTC traded, net premium expenditure of about $5.52 million.
• ETH: Buying ETH-270326-3100-P and selling ETH-270326-3500-C, with about 14,000 ETH traded, net premium expenditure of approximately $1.34 million.

The largest ETH strategy is a Bearish Risk Reversal, a type of options combination used to express a bearish outlook. Its core logic involves buying lower-strike puts and selling higher-strike calls, effectively capping upside while gaining downside exposure at a lower cost. This options combination can be executed using the platform’s bundled order strategy tools.

Platform Updates

Gate has launched a convenient options trading tool — the bundled strategy order, designed to help users respond more efficiently to different market conditions, such as narrow-range oscillations, slow gains, or slow declines. This feature covers various common multi-leg options strategies, including spreads and straddles.

With bundled strategy orders, users can create multiple options legs in a single operation, with an intuitive display of overall costs, profit and loss structures (PnL), and risk exposure. This eliminates the need for placing individual leg orders, enabling efficient construction and management of multi-leg options strategies, significantly reducing operational complexity and improving trading efficiency.

Bundled strategy product description: https://www.gate.com/zh/help/other/combinationstrategies/49208