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As the U.S. prepares for the launch of exchange-traded funds (ETFs) directly investing in Ethereum (ETH) in mid-July, the ether options market on Deribit is showing a bullish trend. This trend closely mirrors the sentiment seen in bitcoin (BTC) options prior to the debut of BTC ETFs six months ago, with one key difference: the bullish sentiment in the ether options market is more measured than it was for bitcoin in early January, indicating a lower probability of a sell-the-fact event post-ETF launch.
Ether’s options market displays a bullish bias over the 30-day and six-month periods ahead of the ETF launch. However, unlike bitcoin, ether’s market shows no signs of bullish euphoria. This measured bullish sentiment could potentially lead to ether outperformance later.
At present, ether’s 30-day options skew—an indicator of traders’ willingness to pay for an asymmetric payout in either direction—holds around 3%, according to Amberdata. This positive value indicates a higher willingness to pay for call options, which offer an asymmetric payout in the upward direction over the next four weeks. Call options give the holder the right to buy an asset at a predetermined price within a specific timeframe, representing a bullish bet, while put options represent a bearish bet.
Additionally, ether calls expiring in six months also trade at a premium relative to puts, with the skew hovering around 5%. This suggests that traders are positioning for ether strength both leading into the ETF debut and over the following six months. Similar strategies were observed in the BTC options market about two weeks before BTC ETFs began trading on January 11, where BTC’s 30-day and 180-day skews were around 3.5% and 5%, respectively.
The absence of bullish euphoria in the ether options market is noteworthy. The measured sentiment might result in ether outperforming expectations post-ETF launch, avoiding the potential sell-the-fact scenario that can occur when markets experience excessive bullishness.
The upcoming spot ether ETFs are expected to attract mainstream institutional demand worth billions of dollars, similar to the impact of BTC ETFs, which have garnered net inflows of over $14 billion to date, according to Farside Investors. Analytics firm IntoTheBlock noted that the ETF launches could have a significant impact on ether, given its supply is highly concentrated among long-term holders. If the inflows for ether ETFs are proportionally as large as those for bitcoin, they could have an outsized effect on the market.
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