Options Markets are more bullish on Bitcoin than Ethereum – What Does This Mean for Ethereum/BTC?
According to different market gauges provided by The Block, investors are more bullish about Bitcoin than Ether (ETH). This could translate into a decrease in Bitcoin’s value over the coming months. This could lead to a decrease in the ETH/BTC exchange rates over the coming weeks and months.
A chart by The Block shows that the popular 25% delta skew of Bitcoin options expiring within 180 days was 1.32 according to the 5Th The February highs were not far from the 3.3 area’s one-year highs. The 25% delta skew for Bitcoin options expiring in 7, 30, 60 and 90 days was a bit lower than zero, but still above zero. This indicates that the market has a moderately positive bias.
The 25% delta options-skew is a widely monitored indicator of the extent to which trading desks are charging too much or too little for downside or upside protection through the call and put options they sell to investors. An investor can have the option, but not the obligation, to sell an asset at a certain price. A call option allows an investor to purchase an asset at a specified price but it is not binding.
If 25% of delta options are above 0 it means that desks charge more for equivalent call options to puts. This can be seen as a bullish sign that investors are more willing to take out protection from (or bet against) an increase in prices.
In the meantime, the 25% delta skew Ether options that expires in 180 days was -0.3 on 5Th The February delta skew of Ether option expiring in 7, 30, 60 and 90 days was a little lower at between 0.8% and 1.5%. Options markets indicate investors have a slight negative bias towards ETH at the moment.
The Put/Call Ratio also applies to Ethereum Bulls
On the 4th of December, the ratio between open interest in Bitcoin put and call options was 0.39Th It was close to its lowest level in more than two years at February. If the ratio is below 1, investors prefer to own call options (betts on the price rising), over put options (bets about the price falling).
The Ethereum Open Interest Put/Call ratio is currently at 0.27. However, it is still significantly higher than its October lows of 0.2. The disappointment for Ether bulls is that while the Bitcoin Open interest put/call ratio has fallen substantially in 2023 due to rising prices, it cannot be said the same for the Ether Open interest put/call ratio.
Options markets are indicating that investors still don’t feel the same way about Bitcoin as they did with Bitcoin, despite their impressive price performance this year (ETH has risen nearly 40%). CoinShare’s most recent report also showed a more positive sentiment towards Bitcoin. Weekly fund flows reportThis report showed that Bitcoin was once more the dominant inflow currency.
Some Ether investors are confused. In just two months, the Ethereum blockchain will be upgraded. The so-called Shanghai hardfork will allow staked ETH withdrawals to be freed up for the first-time. This will encourage significant investment in the Ethereum ecosystem long-term.
Ether is experiencing deflation at the moment, as the annualized burn rate of the cryptocurrency (thanks to Ethereum Improvement Proposal 1509) currently exceeds the cryptocurrency’s issuance rates. Typically, higher prices are associated with assets that become deflationary.
BTC/ETH to Break Lower
Options markets are signaling that ETH/BTC could continue to fall, with the pair falling around 1% at 0.0715 this year and more than 16% compared to last year’s highs of the 0.085 region. ETH/BTC recently provided support in the 0.068 region, largely due to a long-term trend that has supported it since late 2020. Technicians warn that if the uptrend breaks, it could lead to a lower ETH/BTC price in the long-term towards the 2022 lows below 0.05.