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Ethereum options exceed Bitcoin ahead of the upcoming merge

Published by
Nonhlanhla P Dube

Ethereum has been outperforming Bitcoin for quite some time. Despite being more than 5 years younger, the altcoin has grown so quickly that it currently has around half the market cap of bitcoin. This outperformance has persisted throughout the bull market and has now entered the bear market. Ethereum has gone one step further, surpassing Bitcoin in yet another metric: the quantity of open interest in the asset.

Bitcoin’s Open Interest Flips

Glassnode data shows an interesting development in terms of open interest in both Bitcoin and Ethereum options. Bitcoin naturally dominated this metric because it was not only the first cryptocurrency on the market but also the digital asset with the most interest from investors, both retail and institutional.

Ethereum had swiftly surpassed bitcoin in this regard, with open interest reaching R93.5 billion across all Put and Call options, representing a 47% rise in the previous month. The popularity of ETH over this period, as well as its price recovery, has undoubtedly contributed to its dominance.

Bitcoin, on the other hand, remains stable at roughly R71.8 billion in open interest. This puts Ethereum more than 30 points ahead. Ethereum investors are showing their hand, and it is quite bullish, with over R43 billion in Call options and a Put/Call Ratio of 0.26.

The Ethereum Merger Sparks Interest

The impending merge has been the primary driver of the ETH price recovery. Following a period of uncertainty as to whether the upgrade would take place or be postponed once more, Ethereum developers have pushed forward to announce an expected date for the Merge.

With the September 19th deadline stated, investors began to increase their stakes in anticipation of the Merge. With the new month, the Merge becomes closer, and the positive sentiment surrounding the digital asset strengthens. Given that it is possibly one of the most significant developments in crypto history, investors’ enthusiasm is reasonable.

The Merge is also driving the increase in Ethereum open interest. The optimistic feeling comes in response to the upgrade, which will take place next month. It is important to remember, however, that after the Merge, all staked ETH will be available for withdrawal. This will result in an infusion of ETH supply onto the market, potentially causing the price to plummet. At that point, it won’t matter how positive the sentiment is, but rather whether there is enough demand to absorb the increased supply.

This begs the issue of whether this is another case of “buy the rumour, sell the news.” One thing is certain: if the Alonzo hard fork follows in the footsteps of Cardano, ETH users should brace themselves for a period of bear market prices.

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube
Tags: Ethereum
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