There are a lot of lines on this chart of the generic front-month Ether futures over the last year. Sometimes people see this and think there is an arbitrary nature to it. In fairness, there is a little bit of arbitrary nature to it. However, I like to do it because I think the lines can also tell a story. Consider the lines I have drawn on this chart. Let’s start with the downward-sloping line from last October through the present. This line tells the story of a waterfall decline in Ether, a series of lower highs and lower lows. Investor enthusiasm in crypto reached a fever pitch by late summer 2025. Since then, it has waned considerably. Trapped longs looked for levels to get out. The culmination was a gap lower in late January and the ultimate capitulatory low in February. That leads to the next line. The low in February just so happens to be at the level of one year ago as one can see from the line. Price returned to the level where the rally of 2025 began. One can argue that long-term buyers stepped in at the level they used to set the floor last year, and it set the floor again. Since that time, as shown by the red line, a series of higher lows. This is classic accumulation behavior. There was the capitulatory selling, and now traders are seeing accumulation. The last two lines will lead to the trade idea this week. The line that comes in around 2350 is the near-term resistance. Past support is now resistance. The past support occurred after the initial breakout in 2025, and defined the gap that prices fell below in late January. It was an accumulation level from last year and markets gapped below. Now, perhaps, there are people willing to sell at the level that they have held all along. Finally, I see resistance at 2750, the level where price had initially held in November, December and January before gapping lower. This support was the previous resistance from 2025. While the lines may seem arbitrary, they are telling the story of trader behavior over the past year. Markets are currently at resistance and may not break through. However, if they do, there is a gap to close until things get to 2750 level. 

The catalyst that many in crypto are awaiting is the Senate passage of the CLARITY Act. This act was passed by the House last year with expectations it would be passed by the Senate by the end of 2025. Delays of the passage of this act are perhaps behind the selling traders saw in late 2025. Renewed optimism for its passage may be behind the accumulation markets are currently seeing. The big hang-up is about the ability of crypto firms to offer a yield in their account. The bank lobby, which is quite powerful in Washington, is pushing back against this as well as any rewards that crypto firms may choose to offer instead. Institutional investors may be waiting for this legislation to be finalized before they look to actively participate in the markets. Crypto investment banking firm Galaxy put out a note at the end of April indicating that the odds of passage are roughly 50-50, which based on price action in crypto, seems about right. If one wants to take a position in crypto right now, they likely need to have a view on the passage of this act. Is there any reason to think there is momentum behind this act besides what traders may hear from the Washington headlines?

A major theme in 2026 will be asset tokenization. Don’t take it from me. No less than the World Economic Forum, the organization that hosts the annual meeting in Davos that is frequented by a who’s who of public officials and corporate CEOs, put out a report saying that 2026 will be a defining moment for digital assets including digital payments and tokenized assets. More regulatory clarity and increasing enterprise-level deployment are the catalysts for this. Wall Street investment banks, asset managers and custodial banks have trialed real world asset tokenization, lured by the appeal of reducing settlement time and cost. This year is set to be the year the market moves beyond trying out the new process and begins to adopt it wholly. Private markets, real estate, opaque and illiquid products are the primary areas where asset tokenization can deliver considerable improvements for the asset managers who hold them. This major theme is already occurring which McKinsey estimates could be $2 trillion in value (excluding stablecoins) and could lead to the push within the finance lobby to get the CLARITY Act over the line because of the need for the marketplace. 

Recently, a headline on CNBC caught the attention of many in the market. Most are aware of the rapidly rising popularity of prediction markets. Many may also be aware of the accuracy of these markets, as they have predicted not only election outcomes but also pop culture and geopolitical events with accuracy that is beyond simply luck. The attention-grabber, perhaps, was the estimate of how large this market opportunity is. Wall Street firm Bernstein estimates that prediction markets could grow to $1 trillion by 2030. This is massive growth given the total volume across all prediction platforms in 2025 was $44 billion. The total addressable market may catch many by surprise but seeing the investments into firms within the prediction market space by many established finance and venture capital firms, it should not be a surprise and may in fact be too low. Prediction markets, like asset tokenization, relies on blockchain technology particularly those platforms that enable smart contracts. This is another massive trend that could also lead to a positive catalyst in 2026. 

Maybe the most surprising headline in the past month goes to the one above as seen in Forbes. It details how stablecoin transaction volume surpassed ACH transaction volume in March for the first time in history. The $7.5 trillion that was executed via stablecoins globally passed the $6.8 trillion in the ACH network it may replace. This headline may be the most pertinent for the passage of the CLARITY Act as stablecoins are the key initiative of the U.S. administration. With the clear adoption of this technology, the U.S. administration will not want to fall behind its global peers. As such, traders may see presidential pressure put on the Senate to come to some resolution that many in the finance industry, outside of the banks, appear to want for other reasons as well. Traders may well look back at this headline and these moments, as the inflection point that changed the nature of the global payments architecture. 

If you are like me and becoming more bullish that the odds of CLARITY Act passage are greater than 50-50, you might also be bullish directionally on Ether, a key beneficiary of the growth of asset tokenization, prediction markets and stablecoin usage. In order to determine the optimal way to implement that idea, I turn to the volatility market. The first step is to look at term structure of implied volatility. When I do, I see a spike in implied volatility around July expiration. This could be that the market thinks the key time period for the catalyst in Washington is July, with the Senate perhaps looking to get a deal done before the Fourth of July recess. This is a fair point, but when I look at the dates on either side, I see a meaningful discount for both the June and August contracts. Is it possible a catalyst could happen sooner than later? Is it possible the administration is looking for some positive headlines it wants to put into the news cycle? The next stop is to look at the implied volatility surface. When I do, I see that upside call options trade at implied volatility below both the at-the-money and the downside put options. This likely speaks to both the more nervous side of the market still being the downside, perhaps by those who have been accumulating longs, as well as the strong resistance levels in futures both at the current level and up at 2750 as well. This curve and this surface can give me a guide for the best implementation of my idea. 

Putting this together, I am more bullish than the market so I want an idea that has positive delta to it so I can gain on the upside. Implied volatility overall is near the lows of the last year, so I would rather be long than short, and if I am going to get long, I prefer to be long the June contract than paying the premium for July. I know the risk is nothing gets done until the final hours before Senate vacation, but I feel I am being given enough of a discount to take that chance. That said, I do want to find an idea that has limited premium but still large potential gains, giving me an asymmetric reward to risk. While there is a lot of resistance at current levels, if things break through, there is reason to believe it could quickly close the gap to 2750. One might think that this could bring in some more resistance so while I usually prefer open-ended upside, it is prudent to understand this resistance and use it as a way to reduce my overall cost. Putting these together, I think a June expiration 2500-2700-2800 call butterfly is the best idea. The strikes are asymmetric, which I like because if markets trade up and through the upper strike, I will still make some money. I would be frustrated if I was bullish and things traded to my high strike and I lost, as would be the case in a symmetric call butterfly. The downside is these cost more premium because the upper strike I buy is closer to at the money. Because skew is so cheap on the upside and overall implied volatility is not that high, the total premium for this structure is only 36 ticks. This is the maximum I can lose if there are headlines that this Act will not pass soon or if there is a renewed bout of selling as markets are unable to break current levels. However, if levels trade to and expire at my maximum gain at 2700, I would make 164 ticks (200-point strike difference less the 36-tick premium) meaning my maximum reward to risk is 4.56 to 1. Even if it trades to or through the upper strike at 2800, I would still make 64 ticks (100-tick strike difference less premium) and achieve a 1.78 to 1 reward to risk. Still not a bad outcome for the trade. 

Long-time readers know the split-strike butterfly is one of my favorite directional ideas because it does lead to very good reward-to-risk opportunities. In Ether right now, this trade could set up very well if one agrees that there are very clear and positive underlying trends in asset tokenization, prediction markets and stablecoins that positively impact Ether, and there is a potentially imminent catalyst in the Senate passage of the CLARITY Act. Having the tools to analyze these trades and the products to trade them at CME Group gives traders the edge.

Considering these factors, a long bitcoin vs. ether position, expressed through options, appears to be a favorable setup. The relative spot price is encountering Fibonacci resistance at the 38.2% retracement level. Conversly, the inverse price ratio, currently around25, seems to be holding and could indicate a move towards 35 or 40. Financial conditions are easy but do not appear to be as influential in the pair as they have in the past, and unless there is a change, it does not look like central banks are going to grow their balance sheets, which has been a driver for ether relative tobBitcoin in the past. The individual technical chart for bitcoin has more positives and the chart for ether more negatives. Leveraged money is reducing its bitcoin short in favor of adding to the ether short. Bitcoin implied volatility is low and possibly turning higher, while ether implied volatility is rangebound.

Given this analysis, I’m looking to buy bitcoin calls financed by selling ether calls. This is a short-term trade, targeting a reversion to the mean, with a Friday expiration three weeks out. The bitcoin calls are 10% out of the money, trading a 36 implied volatility, costing 849 ticks ($4,245 per contract, with each tick worth $5). The ether calls I’ve chosen to sell are nearly 14% out of the money, trading at a 66 implied volatility, and cost 109 ticks ($5,464 at $50 a tick). By selling a much higher volatility, I can set the strike price further out of the money while still netting a premium.

If both futures move lower and both calls are out of the money, a trader will make about $1,200, the difference in the premiums. If both coins move higher, it depends on what happens to the relative price ratio as to whether the trader would make or lose money. This trade is long the relative price ratio, which is currently at 25 (125,000/5,000), representing the low level seen in the ratio of generic front-month futures. If the ratio rises to, say, 30, it could occur in several ways. If ether remains around 4,400 and bitcoin moves to 132,000, Ether options would be out of the money while Bitcoin options would be deep in the money. Even if Ether options move in the money ( e.g., on a move to 6,000), the trader could still profit if the ratio increases, as this would correspond with bitcoin at 180,000. Ether would have to move above 5,000, with bitcoin remaining below 125,000, which means that the ratio would fall below 25. While possible, the entry level remains attractive on a reward-to-risk basis, as it would represent a move to levels not seen in over a year.

I favor these trades not because they are guaranteed, but because they offer a win in two out of three scenarios: either both futures fall (regardless of the ratio) or both rise with the ratio. I only incur a lose if both futures rise and the ratio falls, a risk I’m willing to accept.

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