In a surprising twist for the crypto markets, traders are now paying a premium to hedge against a decline in Ether (ETH) compared to Bitcoin (BTC), according to the latest data from Deribit. This shift in sentiment marks a turn from recent weeks where Ether was the favored asset among institutional investors, raising eyebrows across the industry.
Rising Costs and Shifting Sentiment
Options data reveals that Ether’s 25-delta risk reversals for contracts expiring in August and September are trading at a notable -2% to -7%. Put options, offering protection against price drops, are fetching a premium over calls, signaling increased bearish sentiment. In contrast, Bitcoin’s short-term put options are only slightly pricier than calls, with premiums ranging from 1% to 2.5%. This suggests a more moderate concern about BTC’s downside risk.
“The market’s current stance on Ether is intriguing,” said Clara Song, a crypto analyst at Amberdata. “We’re seeing a clear pivot in sentiment, as traders brace for potential volatility in Ether’s price more so than Bitcoin.”
The Dynamics of Options and Market Anxiety
For those unfamiliar with the lingo, a put option allows its holder to sell an asset at a predetermined price within a specific timeframe—essentially a bearish maneuver, often used to hedge against or profit from a downturn. A call option, on the other hand, is a bullish bet, granting the right to purchase the asset.
The 25-delta risk reversal strategy, consisting of a long put and a short call option, is a common tool in the FX markets to read investor sentiment. Ether’s negative values here underscore heightened worries about its near-term outlook. This sentiment echoes recent trends where Ethereum $6K Christmas Odds Surge as Options Traders Reprice Tail Risk, highlighting the market’s ongoing volatility.
Ether experienced a remarkable 48% surge in July, topping out at $3,941, a seven-month high. This rally far outpaced Bitcoin’s modest 8% gain. However, most of Ether’s gains occurred in the first half of the month, and the momentum has since waned amid concerns that the surge was driven more by corporate adoption than genuine on-chain activity.
Context and Forward-Looking Concerns
With Ether recently trading at $3,600, down over 6% in just 24 hours, this market angst seems justified. Bitcoin, meanwhile, has also seen a slip, trading at $114,380, a 3% drop according to CoinDesk data. This follows a broader pattern in the market, as detailed in Crypto Inflows Near $2 Billion as Ethereum Outshines Bitcoin in Altcoin-Led Rally, where Ethereum’s performance has been a focal point in recent rallies.
“The crypto markets are navigating an uncertain landscape,” explains Jacob Turner, a market strategist at CryptoInsights. “Ether’s recent price action raises questions about whether its underlying fundamentals can support current valuations.”
So, what does this all mean for investors? While the premium on Ether’s put options reflects current market jitters, it also opens up potential opportunities for those willing to bet on its resilience—or capitalize on further declines.
Looking ahead, the crypto community will be keenly watching how these bearish sentiments evolve, especially as we approach pivotal contract expirations in the coming months. Whether this trend continues or reverses will depend heavily on broader market dynamics and the ever-elusive factor of investor sentiment. As always in the crypto world, only time will tell.
Source
This article is based on: Are Traders Done With Ether? Options Market Now Prices Higher Risk for ETH Than BTC
Further Reading
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- Ether, Dogecoin Lead Modest Market Gains, Bitcoin Holds $118K as CPI Print Fuels Rate Cut Bets
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
