Institutions are increasingly backing Ethereum over Bitcoin, with three key indicators pointing to a bias towards ETH in the crypto market.
Ether Favored Over Bitcoin by Big Money: 3 Key Indicators Point to ETH Bias in Crypto Market
The cryptocurrency market has witnessed a significant shift in recent times, with institutions increasingly leaning towards Ethereum (ETH) over Bitcoin (BTC). Several key indicators suggest that traders are becoming more bullish on ether relative to bitcoin. Here are three crucial clues that point to the bias towards ETH.
Ethereum is an open-source, decentralized platform founded in 2014 by Vitalik Buterin.
It allows developers to build and deploy smart contracts, which are self-executing contracts with the terms of the agreement written directly into code.
Ethereum's blockchain technology enables secure, transparent, and tamper-proof transactions.
With a market capitalization of over $200 billion, Ethereum is one of the largest cryptocurrencies in the world.
Growing Bullish Sentiment for Ether
Options listed on Deribit show a stronger bullish positioning for ether relative to bitcoin. The 25-delta risk reversals, a measure of sentiment derived by examining the difference in implied volatility between calls and puts, were positive as of writing, reflecting a bias towards call options. However, ETH risk reversals were more expensive than BTC, indicating that traders were relatively more bullish on ‘ether’ compared to bitcoin.
Institutions Lean Towards Ether
The notional open interest in CME bitcoin (BTC) futures has risen by roughly 70% to over $17 billion since the early April crash, according to data source Velo. However, this growth has stalled above $17 billion over the past seven days. In contrast, ‘ether’s’ open interest has jumped 186% to $3.15 billion since the same period, with the growth accelerating over the past two weeks. This diverging trend suggests that institutions are increasingly leaning towards Ether.
Institutions refer to established organizations, structures, and systems that govern human behavior and interactions.
They can be formal, such as governments, schools, or hospitals, or informal, like social norms, customs, or traditions.
Institutions shape individual and collective behavior by establishing rules, regulations, and standards of conduct.
They play a crucial role in maintaining social order, promoting economic growth, and providing public services.
Elevated Premiums and Funding Rates
The bias for ETH is also evident from the relative richness of premiums in ether futures. As of the time of writing, one-month ‘Ether futures boasted an annualized premium of 10.5%,’ the highest since January, according to Velo. Meanwhile, bitcoin (BTC) futures premium was 8.74%. Elevated premiums indicate optimism and strong buying interest, often signaling a bullish trend. The relative richness of ether futures premium suggests traders are more bullish on ‘ETH’ compared to BTC.
The growing bullish sentiment for ether is a significant development in the cryptocurrency market, with institutions increasingly backing the second-largest cryptocurrency by market capitalization. As the market continues to evolve, it will be interesting to see how this bias towards ETH plays out and whether it leads to further gains for the token.
