The native token of the Ethereum blockchain, Ether (ETH), has historically surpassed the industry leader Bitcoin (BTC) in the options market for the first time.
As of reporting, the cumulative dollar value of Ethereum options contracts on Deribit Exchange reached $5.7 billion, marking a 32% increase compared to Bitcoin’s open interest of $4.3 billion. Deribit is the largest options exchange, accounting for over 90% of global trading volume and open interest.
Understanding Open Interest in Options Trading
Open interest (OI) refers to the total number of outstanding derivative contracts, such as options, that have not been settled or closed. The theoretical OI is calculated by multiplying the number of outstanding contracts by the current spot market price of the underlying asset.
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Why Ethereum Options Are Gaining Traction
Ether’s unprecedented lead over Bitcoin in the options market stems from traders aggressively purchasing call options—betting on ETH’s price surge. This optimism is driven by Ethereum’s upcoming “Merge,” which is expected to reduce ETH’s issuance by 90% and potentially transform the cryptocurrency into a compelling store of value.
The Merge, tentatively scheduled for September, will combine Ethereum’s current Proof-of-Work (PoW) blockchain with the Proof-of-Stake (PoS) Beacon Chain that has been operational since 2020.
Key Indicators of Bullish Sentiment
- Put/Call Ratio: The ratio of open put options to call options for ETH has dropped to 0.26, a yearly low, signaling strong bullish momentum. Bitcoin’s put/call ratio stands at 0.5 for comparison.
- December Expiry Contracts: ETH’s highest open interest is concentrated in $3,000-strike call options expiring in December.
“While some remain cautious about the Merge’s outcome, Deribit observes significant OI buildup in post-Merge options. The overall put/call ratio at yearly lows confirms bullish momentum,” noted Luuk Strijers, Chief Commercial Officer at Deribit.
Ethereum’s Resurgence in Spot Markets
Ether has also reclaimed its position as the most-traded cryptocurrency on Nasdaq-listed Coinbase (COIN), accounting for 33.4% of total trading volume in the week ending July 29. Bitcoin followed at 32%, with Solana (SOL) trailing far behind.
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Coinbase’s weekly market report highlighted:
“Investors are diversifying into ETH and altcoins like SOL, MATIC, and AVAX as Bitcoin underperforms.”
Market Capitalization and Future Projections
Despite its lead in derivatives and spot trading, Ethereum’s $199 billion market cap remains half of Bitcoin’s $443 billion. However, some analysts predict ETH could overtake BTC as the world’s largest cryptocurrency by valuation soon.
Derivatives Market Snapshot
| Metric | Ethereum | Bitcoin | Ratio |
|---|---|---|---|
| Futures OI | $6B | $12B | 0.5x |
| Daily Options Volume | Leading | Secondary | — |
Data sourced from Skew at time of publication.
FAQs
1. Why is Ethereum’s options volume surpassing Bitcoin’s?
Traders are betting on ETH’s price surge ahead of the Merge, which promises reduced supply and enhanced scalability.
2. What does a low put/call ratio indicate?
A ratio below 1 (e.g., ETH’s 0.26) signals dominant bullish sentiment, as call options outnumber puts.
3. Could Ethereum’s market cap overtake Bitcoin’s?
While possible, ETH’s $199B cap trails BTC’s $443B. Growth depends on post-Merge adoption and macroeconomic factors.
4. How does the Merge affect ETH’s value?
The shift to PoS may cut ETH issuance by 90%, creating deflationary pressure that could boost prices.
5. Which altcoins are gaining traction alongside ETH?
SOL, MATIC, and AVAX are seeing renewed interest as investors diversify beyond Bitcoin.
6. What risks accompany the Merge?
Technical delays or security vulnerabilities during the transition could temporarily dampen ETH’s momentum.
Disclaimer: This content is for informational purposes only and does not constitute financial advice.
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