Ether outperforms Bitcoin in the options market for the first time

CHINA - 2021/12/09: In this photo illustration the cryptocurrency generated by the Ethereum logo (Ether, ETH) is displayed on a smartphone with a stock market economic index graph in the background.  (Photo illustration by Chukrut Budrul/SOPA Images/LightRocket via Getty Images)

Crypto analysts say ethereum could soon overtake bitcoin in terms of market cap ranking. Photo: Chukrut Budrul/SOPA Images/LightRocket via Getty Images

Ether has traded bitcoin for the first time on the world’s largest options market.

Crypto analysts see this as the latest sign that ethereum (ETH-USD) could soon overtake bitcoin in terms of market cap ranking.

Currently bitcoin (USD-BTC), which fell nearly 2% to $22,800 (£18,077) on Tuesday, has consistently topped cryptocurrency rankings by market cap.

As of this writing, bitcoin has a market capitalization of roughly $436 billion compared to ethereum’s $190 billion.

However, Ethereum has followed bitcoin’s decline: Ether fell by almost 6% in the last 24 hours.

Read more: live cryptocurrency prices

On Monday, the world’s largest options exchange, Debitsaw $5.7 billion locked up in ether option contracts.

This is 32% higher than the $4.3 billion locked in open bitcoin options trades in the same market.

Ethereum merger

There are many more traders interested in trading ether for bitcoin ahead of the next ethereum merger in September.

The long-awaited ‘merger’ of ethereum will see the network become a ‘proof-of-stake’ blockchain.

The merger is scheduled for September and will make Ethereum a low-power blockchain as it will have abandoned the power-intensive “proof-of-work” method of verifying transactions that was invented by Satoshi Nakamoto with the founding of Bitcoin. .

The merger will not only drastically improve the environmental impact of ethereum, but also pave the way for cheaper and more efficient transactions on the network.

Merging Ethereum with proof-of-stake could open up the blockchain to inward investment from institutional finance, which has been cautious in the past due to the carbon footprint associated with proof-of-work.

Read more: Ethereum: Two Glimmers of Hope for Crypto Investors as Crash Stabilizes

One of the largest cryptocurrency exchanges in the world, Coinbase (CURRENCY), forecasts that US domestic institutional clients will want to generate returns by staking ether after the merger.

Coinbase Prime now provides institutions with an end-to-end staking experience.

Customers can create a wallet, decide how much to stake, and start participation with a Coinbase Prime account.

Staking 32 ether sets up an ethereum node and is the equivalent of a mining operation on the bitcoin blockchain.

Read more: Ethereum Supply Will Shrink After ‘Merge’ Update Says Vitalik Buterin

Staking ethereum, in the proof-of-stake consensus mechanism, allows the node to verify transactions and earn rewards through generous returns.

In ethereum 2.0, ether will become a deflationary cryptocurrency with the cryptocurrency’s annual issuance cut by 90%.

Investors are bullish on ethereum’s forecast that a successful merger with a proof-of-stake consensus mechanism and restriction of annual issuance will appreciate the price of its native token, ether. Essentially, this means fewer ether tokens for everyone.

How options work

In the Deribit cryptocurrency options market, the number of ether call options (the right to buy ether at a specific price within a certain period of time) has increased.

These call options have not been matched by the corresponding put options: the right to sell ether at a specified price at a later date.

This increased demand for call over put options has been seen as an indicator that ethereum could make a move higher. Whereas, an increase in put options provides protection against price declines.

Watch: The Crypto Mile Weekly Update: Coinbase SEC Investigation & Crypto Recovery After Fed Rate Hike

the somersault

Traders are lining up many ether call options for a possible ethereum bull run after the merger.

The sell-sell open interest rolling ratio has been seen as further evidence that the ‘turnaround’ may happen, where ethereum outperforms bitcoin in terms of overall market cap.

The term refers to the hypothetical moment when ethereum overtakes bitcoin as the world’s largest cryptocurrency in total value.

Crypto investor and influencer Ben Armstrong tweeted on Tuesday: “We are looking at the early stages of Flippening $ETH.”

With the merger looming in just over a month, many cryptanalysts claim that change is getting closer every day.

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