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 has picked up materially since mid-April, with dominant exchange Deribit contributing over 80% of the total activity.
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.
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?'"
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.