Metric loss

Ether makes history as key metric in ETH options outpaces Bitcoin by 32%

Ether makes history as key metric in ETH options outpaces Bitcoin by 32%

Ahead of The Merge, ETH takes over BTC in the options market with an impressive valuation of $5.6 billion

By Shashank Bhardwaj


Image: Shutterstock

For the first time, Ether (ETH) overtook Bitcoin (BTC) in the options market as Deribit Ether options open interest (OI), with the former worth $5.6 billion and the latter worth $5.6 billion. $4.6 billion.


The formula for calculating OI is to add all contracts of open trades and subtract contracts when a trade is closed. It is used to understand the strength behind price trends and, by extension, market sentiments. Data from the Deribit exchange, which is the largest BTC and ETH options exchange in the world, shows that ETH options are mostly call options, with a put/call ratio of 0.26. The reason why ETH Put/Call ratios are hitting a yearly low could be attributed to the upcoming transition to a proof-of-stake mechanism, The Merge, which is due to take place in the third week of September.

As a background, under a put option, buyers have the freedom to sell their asset at a pre-determined price on or before a specific date. While the sell buyers are bearish, the buy buyers lean to the opposite side and are more bullish. When a put/call ratio is greater than 0.7 or greater than one, it indicates bearish market sentiment, while a ratio value below 0.7 and close to 0.5 indicates an uptrend. emerges in the market. Thus, it can be seen that ETH OI has an underlying bullish sentiment among traders.

ETH is taking over BTC in the options market, but another problem arises as quarterly ETH futures contracts are due to expire in December 2022. With the spot price higher than the futures price, ETH contracts appear to be struggling against backwardation . As the spot and futures price of Ether rose to -$8 on Monday, BTC rebounded from a tough run in June with 15% growth.
Some analysts are also pointing to an airdrop scenario ahead of The Merge, should the chain split. Public feelings are widely divided on whether there will be a smooth network transition or hard work when the time comes for The Merge to take effect.
The writer is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash