Investors are more bullish on bitcoin than ether (ETH) over the next few months, according to various options market gauges of sentiment provided by crypto analytics website The Block. This could mean a downside for the ETH/BTC exchange rate in the coming weeks and months.
According to a chart provided by The Block, a widely followed 25% delta skew Bitcoin Options expiring in 180 days were 1.32 on 5th of February, not much below the recent one-year high in the 3.3 area last month. skew of 25% delta Bitcoin Options expiring in 7, 30, 60, 90 days were slightly lower, but still above zero, so indicating that the market has a slight positive bias.
The 25% delta option skew is a popular monitored proxy of the extent to which trading desks are charging investors more or less for the upside or downside protection through put and call options being sold. A put option gives an investor the right but not the obligation to sell an asset at a predetermined price, while a call option gives an investor the right but not the obligation to buy an asset at a predetermined price.
A 25% delta option skew above 0 suggests that desks are charging more for equivalent call options versus puts. This implies that demand for calls versus puts is higher, which can be interpreted as a bullish sign as investors are more eager to hedge (or bet) a security against a rise in prices.
The delta skew of 25% of ether options expiring in 180 days, meanwhile, was -0.3 on day 5.th In February, while 25% of Ether options expiring in 7, 30, 60, 90 days had a slightly lower delta skew between -0.8 and -1.5. The options markets thus indicate that investors currently have a slight negative bias on ETH.
The Put/Call Ratio Is Also Related For Ethereum Bulls
The ratio between the open interest of bitcoin put and call options was 0.39 on 4th In February, near its lowest level in two years. A ratio below 1 means that investors favor call options (bets on the price going up) over put options (bets on the price going down).
While the Ethereum open interest put/call ratio was last low at 0.27, it remains well above its recent low of around 0.2 at the beginning of last October. Thus Ether bulls will be disappointed to see the bitcoin open interest put/call ratio drop significantly in 2023 as prices rise, the same cannot be said for the ether open interest put/call ratio.
The options markets are sending a clear signal that, despite this year’s impressive price performance (ETH is up nearly 40%), investors have yet to warm up to ETH as much as they have of late for bitcoin. clear signs ahead of better sentiment towards bitcoin Coinshare’s latest was clear Weekly Fund Flow ReportWhich showed bitcoin dominating the flow once again.
Some Ether investors are perplexed. Ethereum The blockchain will undergo a major upgrade in just two months – the so-called Shanghai hard fork will make ETH withdrawals free for the first time, which is expected to entice significant investment into the Ethereum ecosystem in the long run.
During this, ether Currently experiencing deflation, with the annual burn rate of the cryptocurrency (thanks to Ethereum improvement proposal 1559) currently outpacing the issuance rate of the cryptocurrency. When an asset is deflationary, it usually means higher prices over time.
Will ETH/BTC break down?
The options markets are thus sending a signal that ETH/BTC may continue to move lower this year by about 1% at 0.0715 and more than 16% from last year’s high in the 0.085 area. ETH/BTC recently funded support in the 0.068 area, largely thanks to a long-term uptrend that has been providing support since late 2020. Term ETH/BTC moved below the 2022 low of 0.05.
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