This week Bitcoin (BTC) and Ether (ETH) prices reached new highs as a slew of bullish news continued to pump investors’ hope that the next crypto-bull market will mirror the one seen in 2017.
Many novice traders simply follow spot prices on the major crypto exchanges to gauge the direction price might take. However, reviewing options markets data can provide additional relevant insights on market sentiment.
Looking at the most recent activity in Bitcoin options, it is clear that some trades occurred on strikes that seemed improbable even for the most bullish analysts. These trades include 20 BTC CME December call options with a $70,000 strike and the 56 BTC worth of $100,000 December strikes at LedgerX.
These anecdotal trades might not reflect the broader market conditions, but oddly enough, the highest Ether options contract for Dec 2020 stands at $1,120. This trade is undoubtedly bullish considering there are only 42 days left until expiry, but not even close to the BTC options pending 330% upside or higher.
It is worth noting that Deribit also holds Ether call options for March 2021 with strikes trading up to $1,600. Although this effect might have been caused by the ETH 2.0 launch date on Dec. 1, its upside stands at 230%. This is considerably lower than Bitcoin’s options.
ETH options open interest by strike, in ETH thousands. Source: Skew
As the data above shows, out of the $613 million in Ether options open interest, a mere 28% stands at $460 and higher. This situation can be partially explained by the 23% rally that occurred over the past ten days, indicating that traders were not expecting these prices.
It’s also important to remember that options until March 2021 are listed on most exchanges. Therefore some optimism ought to be expected for the more distant dates. Buying options for prices way above the market level is relatively cheap. The $600 ETH call option for January 2021 was trading at $12 just two weeks ago.
Traders are more optimistic about Bitcoin
When comparing this data to the Bitcoin options markets, there’s a striking difference. BTC options are remarkably more bullish, and there are $50K call options that were placed long ago for June and December 2021.
BTC options open interest by strike, in BTC thousands. Source: Skew
Take notice how, unlike Ether markets, there are some massive bets above $17,000. This time around, 40% out of the $3.75 billion BTC options open interest stands at $16,000 and above.
Bitcoin price has increased by 18.5% over the past ten days, so these optimistic bets would have seemed even more unrealistic back then. Thus, the recent ETH rally shouldn’t be an excuse for the lack of over-optimistic option trades.
Consequently, one can only conclude that Ether traders were not as bullish as Bitcoin traders. Investors may infer that this is a good thing, as unrealistic expectations might frustrate investors.
Nevertheless, Ether investors’ lack of appetite in willing to bet $17 for a 25% bull run until Dec. 25 is telling.