Key Metrics Suggest Ether Gaining Traction Over Bitcoin Among Traders

In a recent development in the crypto world, traders seem to be shifting their focus from Bitcoin BTC/USD to Ethereum ETH/USD, Ethereum’s native token. The move, indicated by key derivatives market metrics, suggests that Ether might outperform shortly.

What Happened: A CoinDesk report revealed a change in trader focus from Bitcoin, which rallied over 60% this quarter, to Ether, which saw a lesser gain of 35% this quarter. However, the dollar value locked in the Chicago Mercantile Exchange’s cash-settled Ether futures contract increased by 30% to $711 million in the past five days, outpacing Bitcoin’s 19% growth to $4.9 billion, as per Velo Data.

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Reflexivity Research noted an emerging positive spread between Ether and Bitcoin futures pricing, with Ether futures showing a 5% higher premium relative to the spot index price than Bitcoin early this week.

The research firm stated on Dec. 5, “The futures basis for Ethereum on CME is now trading at a 5% premium to that of Bitcoin, now over 20%. In addition, we can see that open interest for ETH on the CME has now started to rise.”

In the Deribit-listed options market, traders are reportedly showing a stronger preference for Ether calls and Bitcoin puts. Amberdata’s report shows that the one-month Ether call-put skew has doubled to over 4% this month, implying a strengthening call bias, while Bitcoin’s one-month skew has dropped from 5% to 2%.

Why It Matters: This shift in trader focus comes amid a backdrop of institutional investors’ preference for Bitcoin and Ether over altcoins. Institutional investors, wary of altcoins, have been boosting their Bitcoin holdings during the first three quarters of 2023. The report noted that in September alone, a staggering 50% of institutional investors’ asset portfolios were allocated to Bitcoin. The current shift to Ether indicates a potential change in this trend.

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