Ethereum (ETH) Outperforms Bitcoin (BTC) In The Options Market For The First Time In History

Ethereum-ETH

✍️ 3 August, 2022 - 15:53 👤 Editor: Jakub Motyka

  • For the first time in history, ETH has outperformed BTC in the options market.
  • As a result, the price of Ethereum has entered backwardation.
  • What could we expect from Ethereum in the coming days?

Ethereum (ETH) has surpassed Bitcoin for the first time in history in the options market. This, after the ETH options open interest (OI) , being close to USD 5,600 million, represent 32% more than those valued in BTC, USD 4,600 million. This parameter is obtained by adding the open operations and is used as an indicator of the direction of the market and the force behind the price trend. In other words, there is a higher proportion of purchases in ETH than in BTC.

At the moment, the open interest of the Ethereum options market has a ratio of 0.26. An OI of 0.7 to 1 indicates a bearish market sentiment, while a value below 0.5 represents a bullish direction. Put another way, there is a strong bullish sentiment among ETH traders, possibly associated with the merge. For this reason, Ethereum has entered Backwardation in the futures market.

What Does It Mean That Ethereum (ETH) Has Entered Backwardation?

“Backwardation” is understood when the price of an asset in the futures market is lower than the current price. Due to the growing dominance of Ethereum (ETH) within the options market, quarterly contracts are priced lower than spot contracts. While this may seem like the global sentiment is bearish, Bitcoin (BTC) had a 15% gain after entering a period of backwardation in June.

There is a lot of expectation around the migration from Proof of Work (PoW) to Proof of Stake (PoS) of Ethereum. As a result of this, the price of ETH has had a slight increase in the last week. Many analysts believe that this will not stop until the Merge has been completed, however, many fear that this could lead to a fork, as there is a significant segment of the mining population that refuses to leave the PoW.

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