Ethereum’s open interest reverses Bitcoin’s for the first time ever

Ethereum’s open interest reverses Bitcoin’s for the first time ever
Ethereum’s open interest reverses Bitcoin’s for the first time ever

The ongoing Ethereum (ETH) network upgrades have pushed some analysts to speculate that the second-ranked cryptocurrency could overtake Bitcoin (BTC) in the future. This opportunity has been partially realized after Ethreum reversed Bitcoin in the options market for the first time in its history.

Notably, as of August 1, open interest in Deribit Ethereum options valued at $5.6 billion exceeded open interest in Bitcoin options valued at $4.3 billion across all exchanges, data of cryptanalysis platform Glass node indicates.

As of press time, Ethereum options are dominated by calls, with a bid-to-bid ratio of 0.26. Data indicates that the call option period is concentrated to 30 September and 30 December, at 1.2 billion and 1.8 billion respectively.

Bitcoin and Ethereum Options Open Interest Chart. Source: Glassnode.

Under Deribit, the world’s leading crypto options exchange by trading volume and open positions, one Ethereum options contract represents one ETH. Under the put option, buyers have the right, but not the obligation, to sell the underlying asset at a predetermined price on or before a specific date. Overall, put buyers are implicitly bearish while a call option trader is bullish.

Ethereum Rises Ahead of Merge Upgrade

Etherum’s lead against Bitcoin comes amid the asset’s continued rise in popularity that appeared to be fueled by the upcoming Merge upgrade. Most investors are betting on the upgrade which will partially lead to a reduction in ETH issuance and add a store of value to the asset.

In particular, the update will merge Ethereum’s current Proof-of-Work (PoW) blockchain with a Proof-of-Stake (PoS) blockchain called the Beacon Chain. The move is seen as bullish for Ethereum.

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In general, investors and market experts seem to be betting on the future of Ethereum, especially with the ongoing high inflation environment. It is worth noting that after the merger, Ethereum will likely become a deflationary currency.

However, it is not clear how long it will take for Ethereum to fill the impact of the Merge upgrade. Especially after such an event, it can also take months before the effect is seen in the market.

Overall, Ethereum is still trying to maintain recent gains that have significantly impacted the overall market. Ethereum has recovered from its second-worst month ever in June.

Ethereum price action

At press time, the asset was trading at $1,650 after gaining nearly 9% over the past seven days.

Ethereum is more likely to register a significant price increase if the merger proves successful.

Finally, despite Ethereum’s smaller gains, the asset is roughly 50% smaller than the total market cap of Bitcoin.

Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.

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