- ETH/BTC ratio’s recent rise doesn’t align with the prevailing bearish sentiment in Ether options.
- Long-term Bitcoin options reflect a bullish bias, pointing to macroeconomic factors and an impending mining reward halving.
Unraveling Ether and Bitcoin’s Options Dynamics
Ether (ETH) and Bitcoin (BTC), two giants of the cryptocurrency domain, recently displayed contrasting behaviors in the market. While the ETH/BTC ratio climbed over 2% last week, a deviation from its customary declines amidst risk aversion, options market insights paint a more intricate picture.
Decoding the Options Landscape
To understand the market sentiment, we delve into options data, an invaluable metric offering a lens into traders’ predictions. Data sourced from Amberdata divulges a prevailing bearish sentiment for Ether across multiple timeframes, spanning from a week to six months. This sentiment is starkly visible in the Ether call-put skews, a metric detailing the volatility premium of call options against puts. At the moment, these skews lean notably into the negative, signifying a dominant preference for puts.
For the uninitiated, puts are a class of derivatives granting its holder the choice (not compulsion) to sell an asset at a pre-agreed price within a specific duration. Essentially, a trader investing in puts anticipates a market downtrend, while a call option investor is banking on a market upswing.
But Bitcoin tells a different tale. Shorter duration skews, including one-week to two-months, are leaning towards puts. However, the longer timeframes indicate a proclivity for calls.
The enduring inclination for extended Bitcoin calls might be anchored in the assumption that Bitcoin, being the apex cryptocurrency, will be the prime beneficiary when the macroeconomic climate turns favorable. As Noelle Acheson, the voice behind the renowned “Crypto Is Macro Now” newsletter, elucidated,
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“Bitcoin’s stature as the quintessential macro crypto asset may witness a surge in investments when the macro backdrop alters.”
In essence, while Ether might momentarily shine due to factors like an anticipated ETF launch, Bitcoin might overshadow it once mainstream investors begin channeling funds into crypto.
Another pivotal element in Bitcoin’s story is its forthcoming fourth mining reward halving, an event historically associated with substantial bullish waves.
Amidst these intricate narratives, both cryptocurrencies witnessed significant price reductions last week. Bitcoin prices plummeted over 10%, and Ether didn’t fare much better, recording roughly an 8% dip. Market pundits attribute Ether’s comparatively better performance to a melange of factors, including the anticipated inauguration of ETH futures-centric exchange-traded funds and market makers’ hedging maneuvers.
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