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The Ethereum options market has seen record trading volumes as demand for ETH has increased in recent weeks. This follows the much-anticipated confirmation from Eth2, which was made official after deposits to an Eth2 contract address reached its threshold.

Analysts at Deribit, the largest cryptocurrency options market, said: “Our ETH options open interest has a new ATH value of $826 million! Expiration on Christmas Day resulted in over 669kETH
OI. ETH Buy/Sell Ratio for This Strike: 1.19 ETH Max Pain Expiration Dec 25th $400!”

As a result, Ethereum may see increased volatility as the large options expiration date approaches December 25th.

Ethereum’s 1-hour price chart. Source: ETHUSD on TradingView.com

Ethereum fundamentals are strengthening

The improvement in Ethereum fundamentals reflects the overall increase in Ethereum trading activity.

For example, on-chain analytics firm inthetheblock reports that the Ethereum network’s hash rate remains at an all-time high. This indicates a growing demand for ETH as it indicates that miners are continuing to allocate their resources to actively mine ETH.

In the short term, mining on the Ethereum blockchain network will continue despite the release of Eth2. As long as mining coexists on Ethereum, rising hash rates will remain a positive indicator for ETH.

The hash rate of the Ethereum blockchain network. Source: intotheblock

The Eth2 network upgrade moves Ethereum from a Proof-of-Work (PoW) consensus algorithm to a Proof-of-Stake (PoS) algorithm, eliminating mining efforts. But for the foreseeable future, the PoW chain will coexist with the beacon chain. Analysts at Intotheblock said:

“While the introduction of the Beacon Chain marks the beginning of the end for #Ethereum miners, the network’s hashrate has remained near its all-time high. Even if the Beacon Chain’s genesis is realized, proof-of-work chains will continue to run in parallel. "

What's next?

Analysts highlighted the growing interest from various sub-sectors within the Ethereum ecosystem. For example, Ryan Sean, co-founder of Mythos Capital
Adams reported that 1% of all ETh supply is now locked in ETH bonds.

Adams pointed out that this shows that many people are seeking exposure to the Ethereum economy, which shows that people regard Ethereum as a currency. He wrote:

“Already 1% of the ETH supply is locked in ETH bonds. Not even a week after launch. There is clear demand for non-sovereign internet bonds. People want exposure to the Ethereum economy. These bonds are denominated in currency. Because Ethereum is money. "

Analysts say Ethereum's long-term growth trajectory remains positive as transaction activity increases, Eth2 offers more scalability, and demand for ETH increases significantly as demand for the currency increases.

Data from the Ethereum options market also explains Ethereum’s huge volatility to date. Traders are increasingly expecting Ethereum’s volatility to increase, especially following a critical network upgrade.