Key derivatives market indicators show sophisticated traders are eyeing Ethereum (Ethereum) Bitcoin is attracting attention in the recent market (Bitcoin)suggesting it could outperform Ethereum’s native token in the coming weeks.
While Bitcoin is up more than 60% this quarter, Ether, a deflationary currency with bond-like appeal and an ESG-compliant label, has lagged far behind, rising 35%, according to CoinDesk data. On longer time frames, the difference in performance is even wider, with Bitcoin gaining 163% compared to 89% for Ethereum.
With money now flowing into Ether futures faster than Bitcoin, the gap could narrow. Nominal open interest, or the value of dollars pegged in cash-settled Ether futures contracts on the Chicago Mercantile Exchange, rose 30% in the past five days to $711 million, according to Vero Data, compared to Bitcoin’s 19 % increase to $4.9 billion. CME’s ETH standard futures contract size is 50 ETH, while the corresponding Bitcoin size is 5 BTC.
The emergence of a new positive spread between Ether and Bitcoin CME futures pricing also suggests as much. According to Reflexivity Research, the premium for Ether futures relative to the spot index price was 5% higher than Bitcoin earlier this week.
“The Ethereum futures benchmark (representing the difference between the spot price and the futures price) on the CME is currently trading at a 5% premium to the Bitcoin benchmark, which is currently over 20%. “CME is now starting to move higher after lagging the rally from Bitcoin,” Reflexivity Research said in a market update dated December 5.
“While it may be too early to say for sure, it appears that tradfi is starting to rotate into ETH ETF trading in the next two months. We will continue to monitor for signs of ETFs,” Reflexivity Research said.
Meanwhile, in the options market listed on Deribit, traders are starting to lean towards Ether calls and Bitcoin inputs. A call option provides the right, but not the obligation, to buy the underlying asset at a specified price at a later date. Buyers of calls are implicitly bullish on the market, while buyers of puts are bearish.
The one-month Ether-call-put skew, which measures the implied volatility premium, or the spread between a call and the demand for a put option expiring in four weeks, has doubled this month to four %, a sign that the call bias is strengthening. Meanwhile, BTC’s one-month skew has fallen from 5% to 2%, a sign that traders are starting to lean more towards puts than calls.
Perhaps Bitcoin will take a breather and Ether may be able to catch up in the coming weeks.