For the first time, Ether (ETH) has surpassed Bitcoin (BTC) in the options market as the open interest (OI) of Deribit Ether options, with a value of $5.6 billion, topped the OI of Bitcoin options, with a value of $4.6 billion.
When a trade is opened, all of the contracts are added together, and when a trade is closed, all of the contracts are subtracted. It serves as a gauge for assessing market mood and the tenacity of price patterns. More than 90% of all trading volume on the planet takes place on Deribit, the largest BTC and ETH options market.
With a put/call ratio of 0.26, the data from the Deribit exchange showed that the majority of ETH options are call options. As the Merge date approaches, the ETH Put/Call ratio has fallen to a new annual low.
When purchasing a put option, buyers can choose whether to sell the underlying asset at a prefixed price on or before a particular date, but they are not required to. Put purchasers are generally inherently bearish, while call option traders are generally bullish.
Put/call ratio values lower than 0.7 and dropping close to 0.5 signal an emerging bullish trend, while put/call ratio values higher than 0.7 and above one indicate bearish market sentiment.
What is causing this jump in Ether OI?
The forthcoming Merge, scheduled for the third week of September, is being blamed for the recent spike in ETH OI in the options market and the underlying positive feeling among traders.
The ETH futures quarterly contracts, due to expire in December 2022, have gone into backwardation, when the futures price becomes less than the spot price, even while ETH continues to gain market share in the options market.
Analysts have mentioned the potential airdrop scenario, and the growing positive anticipation for the impending proof-of-stake (PoS) shift. According to a Galois Capital survey, 53.7% of respondents expected a smooth network transition, compared to 33.1 % who thought the upgrade would result in a hard fork.
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