Amid New Price Highs, Ether Flips Bitcoin on Options Volume

Ether's options market saw record trading volume of $1.32 billion on Monday, far above bitcoin's $879 million.

May 4, 2021 at 11:32 a.m. UTC
Updated Sep 14, 2021 at 12:50 p.m. UTC

Ether's (ETH) record price rally has triggered a flurry of activity in the options market, driving the cryptocurrency to surpass bitcoin (BTC) in terms of trading volumes for the first time.

The "flippening," along with ether's strong price performance in recent weeks, is a further sign of market focus temporarily shifting away from bitcoin, the top crypto asset by market value.

On Monday, four larger exchanges offering ETH options – Deribit, OKEx, Huobi, and bit.com – registered a combined trading volume high of $1.32 billion, surpassing bitcoin's tally for the first time on record. Bitcoin's options market traded contracts worth $879 million on the same day, according to data source Skew. 

Ether's options volume soared as prices for the native token of the Ethereum blockchain rose toward a new lifetime high above $3,400 reached Tuesday. While ether has rallied by over 60% in the past four weeks, bitcoin has dropped by 3%, according to CoinDesk 20 data. 

Options are derivatives contracts that give the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A call option gives the right to purchase, and the put represents the right to sell. 

Ether options volume

Ether options volume has picked up materially since mid-April, with dominant exchange Deribit contributing over 80% of the total activity. 

Ether options open interest

Ether options open interest, or the number of contracts traded but not settled with offsetting positions, has risen sharply to new record highs above $5 billion, per Skew. Meanwhile, open interest in bitcoin's options market has been trending lower in recent weeks, as seen below.

Bitcoin options open interest

A similar divergence is seen in the activity in futures tied to the two top cryptocurrencies. 

The data represents a shift in investor focus from bitcoin to ether, with Ethereum seeing solid organic growth this year, as recently tweeted by DTC Capital's Spencer Noon. 

A report published by digital-asset manager CoinShares on April 26 showed that ether funds and investment products saw an inflow of $34 million in the third week of April, while bitcoin funds lost $21 million.

"New investor money has been flowing into digital assets since the 3rd quarter of last year, but the investor goals are changing," Jeff Dorman, chief investment officer at Arca, noted in a market recap published on Monday. "And in the last few months, the investor interest has narrowed even further to 'can I specifically diversify away from Bitcoin into Ethereum and other digital assets?'"

Analysts foresee a continued bull run in ether, with some betting on a rally to $10,000. Therefore, more traders and investors could join ether's derivatives market in a bid to hedge their spot market exposure, or to take plain bullish or bearish bets. 

At press time, ether's options market is decisively bullish on the cryptocurrency with one, three and six-month put-call skews trading well below zero – a sign of calls (bullish bets) drawing higher than demand than puts. 

Ether put-call skew

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CyberConnect Raises $15M to Expand Social Graph Protocol

The project seeks to make user data interoperable between Web 3 dapps.

The project seeks to make user data interoperable between Web 3 dapps.

2
First Mover Americas: Bitcoin Retakes $30K as 'Institutional Adoption' Makes Crypto More Like Stocks

The latest moves in crypto markets in context for May 17, 2022.

The latest moves in crypto markets in context for May 17, 2022.

3
Jump-Backed Wormhole Bridge Expands to Algorand Blockchain

The cross-chain bridge is hoping to capture some of Algorand’s $136 million in DeFi TVL.

The cross-chain bridge is hoping to capture some of Algorand’s $136 million in DeFi TVL.

4
EY Unveils Supply Chain Manager on Polygon Network

The EY OpsChain Supply Chain Manager, which is now available in beta, is the first joint project between EY and Ethereum scaler Polygon.

The EY OpsChain Supply Chain Manager, which is now available in beta, is the first joint project between EY and Ethereum scaler Polygon.