Ether (ETH) captured Bitcoin (BTC) in the options market for the first time in history as the open interest (OI) of Deribit Ether options, worth $5.6 billion, exceeded the OI of Bitcoin options worth $4.6 billion by 32%.
OI is calculated by adding all contracts from open trades and subtracting contracts when the trade is closed. It is used as an indicator to determine market sentiment and the strength behind price trends. Deribit is the largest BTC and ETH options exchange in the world, accounting for over 90% of global trading volume.
Data from the Deribit exchange highlights that ETH options are essentially call options, with a buy/sell ratio of 0.26. The ETH Put/Call ratio reached a new yearly low as the consolidation date approaches.
Ethereum buy/sell ratio Source: Block
Under a put option, buyers have the right but not the obligation to sell the underlying asset at a pre-determined price on or before a specified date. In general, a put buyer is implicitly bearish, while a put option trader is bullish.
A buy/buy ratio greater than 0.7 or exceeding one indicates bearish market sentiment, while a buy/sell ratio value of less than 0.7 and a dip near 0.5 indicates an emerging bullish trend.
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The recent rally in ETH OI in the options market with a primary bullish trend among traders is attributed to the upcoming consolidation scheduled for the third week of September.
While ETH continues to see increased dominance in the options market, the quarterly ETH futures contract, due to expire in December 2022, has slipped backwards, as the futures price becomes lower than the spot price. Ether spot and futures price rose to -$8 on Monday. While this may sound like a bearish outlook, Bitcoin is up 15% after the price pullback in June.
Aside from rising bullish expectations for the upcoming Proof of Stake (PoS) transition, analysts also pointed to a possible airdrop scenario in the event of a chain split. A survey from Galois Capital revealed that 33.1% of respondents believed the upgrade would lead to a hard fork, while 53.7% expected a smooth transition to the network.