Key Points

Traders are preparing for the upcoming Pectra upgrade for Ethereum (ETH).

This has led to speculation about the potential impact of the “buy the rumor, sell the news” phenomenon.

The Pectra Upgrade

The upgrade is slated for early April, contingent on successful tests scheduled for late February and early March.

Crypto options trading desk QCP Capital reported a bullish trend among traders.

The firm stated, “Traders are positioning for another volatility event, with volatility skewed in favor of calls from March 28 onward.”

QCP Capital also noted that historical trends show a pattern of buying before upgrades and selling off after.

The only exception was the Shanghai upgrade in April 2024.

The Pectra upgrade will implement eleven key features, including blob expansion and smart wallet capabilities.

Recent efforts to increase scalability, such as reducing Ethereum’s average transaction cost, have seen success.

Despite these improvements, there hasn’t been a significant increase in demand for L1.

Whether the Pectra upgrade will boost L1 demand is still uncertain.

In the last 24 hours, the most popular bullish bets were for $3.2k and $3k price targets.

Bearish bets for protection were placed at the $2k target.

This suggests that in the short term, traders expect a surge to $3.2k with $2k as support.

The Options market is less optimistic about Ethereum hitting $4k by the end of April.

Currently, traders are pricing in a 14% chance that Ethereum could reach $4,000.

The odds of hitting $4k by June increase to 25%, indicating a higher likelihood of reaching that level in the summer.

Despite Ethereum’s quiet price action, there has been significant accumulation.

On February 5, 367k Ethereum were moved from exchanges, indicating a strong accumulation trend.

Whether this trend will push Ethereum’s price higher will depend on improvements in the broader market sentiment.