Ethereum Faces Critical Test as Record Options Expiry Looms

As the year draws to a close, Ethereum finds itself in a precarious position, grappling with market forces that threaten to push its price below a key psychological threshold. The asset’s struggle to maintain a foothold above $3,000 is compounded by sector-wide weakness and a specific, looming event in derivatives markets that has investors on edge.

Traders are closely watching December 26th, a date circled on calendars across the industry. On that day, a historic volume of options contracts is set to expire on the Deribit platform. The total notional value facing expiry is a staggering $28.5 billion, with Ethereum-specific contracts accounting for $3.8 billion of that sum.

This enormous concentration of open interest has effectively paralyzed price action, according to market observers. To manage their risk, market makers are engaging in hedging activities on the spot market, which is artificially containing Ethereum’s price within a narrow trading band. Many participants have adopted a wait-and-see approach, anticipating that the current dynamic may shift once this hedging pressure subsides after the holiday period.

Diverging Signals from Major Holders

The market’s indecision is reflected in the contrasting behavior of large-scale investors. On one side, firms like BitMine Immersion Technologies, led by Thomas Lee, are displaying conviction. The company recently purchased nearly 100,000 Ether, worth approximately $300 million, increasing its holdings to over 3.3% of the total supply. This move signals a long-term bullish outlook, despite the position currently showing significant unrealized book losses.

Should investors sell immediately? Or is it worth buying Ethereum?

Conversely, sentiment in the exchange-traded fund (ETF) space tells a different story. Over recent weeks, Ethereum spot ETFs have experienced outflows exceeding $94 million. This persistent selling pressure has weighed on the price, which currently trades around $2,983, well below its 52-week high.

Technical Deterioration Contrasts with Network Strength

From a chart perspective, conditions have recently worsened. Analysts are flagging the potential formation of a "death cross," a bearish technical pattern where the 50-day moving average falls below the 200-day line. Market sentiment, as measured by the "Fear & Greed Index," resides firmly in "extreme fear" territory, a mood exacerbated by Ethereum’s correlation with a similarly struggling Bitcoin.

Fundamentally, however, the Ethereum network appears robust despite the price decline. The successful activation of the "Fusaka" upgrade in early December delivered further improvements to the technical infrastructure, particularly for Layer-2 scaling solutions. The decentralized finance (DeFi) ecosystem also remains stable, with a total value locked of $166 billion, indicating continued healthy usage of the blockchain.

The days leading up to the December 26th options expiry are likely to be decisive. If Ethereum fails to reclaim and stabilize above the $3,000 level promptly, and cannot avert the threatening technical signals, selling pressure could intensify toward the $2,800 support zone. A sustained recovery may only materialize once the uncertainty surrounding this major expiry event has cleared.