Bear or Bull: Analyzing Ether and Bitcoin Options Trends in the Cryptocurrency Market

A bustling crypto market scene with contrasting moods for Ether and Bitcoin. Portray Ether with a gloomy aura, clouds, intense dark shades symbolizing bearish trends. Show Bitcoin as a radiant, triumphant bull amidst a sunrise, showcasing optimism and bullish confidence. Be guided by abstract realism, where metaphoric representations effectively convey market sentiments.

Market indicators for Ether continue to showcase relentless conjecture about an imminent price drop, with expiring put options both in the short and long terms currently commanding superior premium than calls. While a trend towards increased bullishness prevails among Bitcoin options, an ascending ratio of Ether to Bitcoin (ETH/BTC), which grew about 2% last week, conspicuously diverges from its traditional trajectory of suffering hits during wavering market sentiment.

However, according to Amberdata‘s options data, the prediction for Ether leans more towards the bearish end of the spectrum, with traders seemingly hedging against potential price downturns in coming week, and over one, two, three, and six-month timeframes. This is in stark contrast to Bitcoin, that continues to enjoy long-term bullish optimism among traders.

The concept of options skews provides insights into this scenario. Transparency about price shifts is facilitated through the measurement of call options implied volatility premium in contrast with that of puts. With Ether’s call-put skew hovering well below zero, it clearly indicates relatively robust prices for put options, the derivatives used for safeguarding against price drops. Negative skew values are indicative of a preference towards put options.

A closer look at Bitcoin’s options trend reveals a leaning towards puts over one week, one- and two-month skews. However, longer timeframe preferences continue to show an inclination for call options. Persistent preference for long-term BTC call options possibly emerges from a widely held belief that Bitcoin, being the highest-ranking cryptocurrency, stands to benefit first from any foreseeable positive shift in the macroeconomic milieu.

Noelle Acheson, a popular Crypto Is Macro Now newsletter author concurs, noting that Bitcoin continues to be the macro asset for the crypto market. He suggests a potential scenario of fresh, strong inflows as the macro environment starts shifting. Large-scale investors may choose to maintain Bitcoin exposure due its liquidity, market cap, and relative stability.

Bitcoin’s forthcoming fourth mining reward halving next year is also a key factor to consider. Historically, bull runs have followed such programmed halving of supply expansion.

Last week proved challenging for both Bitcoin and Ether, with the former dropping by over 10% and the latter around 8%. Ether’s better performance has likely been due to a combination of factors including anticipations regarding the launch of ETH futures-based exchange-traded funds and market makers’ hedging activities.

Source: Coindesk

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