Crypto investors are showing a very clear preference for Ethereum over Bitcoin, as was pointed out in the latest Crypto Derivatives Analytics Report by Bybit and BlockScholes.
The report, which looks at market trends and trading signals across various platforms, reveals a divergence in investor sentiment for the top crypto thanks to the anticipated launch of the Ether spot ETFs.
Source: Bybit & BlockScholes
The anticipation has resulted in a sustained volatility premium for Ether over BTC amid increased buying activity. BlockScholes’s Senti-Meter Index shows a stronger bullish sentiment for Ethereum compared to Bitcoin. Per the report:
“ETH volatility trades at a 10–15 point premium to BTC’s at all tenor points on the term structure, has recovered its volatility smile skew toward OTM calls much faster than BTC, and has seen incredible trade volumes in calls that far outweigh the activity in its puts.”
The report states that Ether futures have been recovering faster in open interest compared to BTC, despite market fluctuations. Clearly, there is a strong market narrative centered around Ethereum’s ETF prospects.
Bybit and BlockScholes observed that the recovery in ETH futures is far stronger. The massive trading volumes seen in ETH perpetual contracts further support this bullish sentiment.
Source: Bybit & BlockScholes
Investors are busy getting ready to benefit from the potential upswing in Ethereum’s market value. The crypto market saw a large spot sell-off recently, coinciding with the highest single-day trade volume in perpetual swaps over the past month.
Traders rushed to cover their exposure, leading to a fall in open interest. According to the report, this high trade volume, especially in ETH, tells us that many traders were closing out long positions in anticipation of the ETF launch date.
Funding rates for both BTC and ETH have shown resilience since the spot sell-off on June 7. Before then, funding rates dipped negative repeatedly as spot prices moved sideways.
Derivatives market of the top ten cryptocurrencies. Source: Coinglass
The report notes that while annualized yields dropped during the sell-off, both BTC and ETH futures have since recovered. Sadly, they are now trading at lower levels.
The expiration of June futures on June 28 did not bring any major increase in trade volumes. However, open interest has increased faster for Ether than for Bitcoin since then.
The report also points out that the term structure of yields in both markets is now steeper. Short-tenor futures are trading much closer to spot prices, while longer-tenor futures are trading higher.
