Ahead of the debut of the much-anticipated U.S. exchange-traded funds (ETF) that directly invest in ether (ETH) expected to begin trading in mid-July, the trends in the ether options market on Deribit closely mirror the sentiment in bitcoin (BTC) options in the lead-up to the BTC ETFs six months ago. However, there is a key difference that may be pivotal to traders.
At present, ether’s 30-day options skew, which measures what traders are willing to pay for an asymmetric payout in the upward or downward direction, is around 3%, according to Amberdata. This positive value indicates a willingness to pay relatively more for call options, offering buyers an asymmetric payout in the upward direction over the next four weeks. On the other hand, a put represents a bearish bet.
Ether calls expiring in six months are also trading at a premium relative to puts, with the skew hovering at around 5%. Traders are using options to position for ether strength heading into the ETF debut and over the next six months. This strategy is akin to what traders did roughly two weeks before BTC ETFs began trading on Jan. 11, where BTC’s 30-day and 180-day skews were around 3.5% and 5%, respectively.
The bullish positioning in the ether market aligns with expectations that spot ether ETFs will unlock mainstream institutional demand worth billions of dollars. However, the ether market does not show signs of bullish euphoria at the moment. This is different from BTC’s sentiment seven months ago, where there was a stronger bias for calls than the 30-day skew, indicating heightened optimism or expectations of a price increase soon.
The current pricing of ether options compared to bitcoin in January suggests that the ether market is not as euphoric as BTC was seven months ago. This perhaps weakens the case for a sell-the-fact pullback. The seven-day skew remains below the 30-day skew in the ether market, exhibiting a relatively measured bullish bias.
Ether has declined from $4,000 to $3,350 since late May, failing to keep pace with bitcoin’s rally to new record highs in the first quarter. Several analysts are unsure if the demand for ether ETFs will match the benchmark set by bitcoin ETFs. Despite the somber mood in the broader market, the pessimism might actually lead to ether outperformance according to some analysts.
In conclusion, traders in the ether options market are positioning themselves for potential strength ahead of the ETF debut. The measured bullish sentiment, lack of euphoria, and cautious optimism in the market could all play a role in shaping the future performance of ether compared to bitcoin. It remains to be seen how the launch of ETFs will impact the market dynamics and investor sentiment in the coming months.
