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Crypto investors are currently focusing on the largest cryptocurrency, Bitcoin (BTC), rather than altcoins like Shiba, XRP, Dogecoin, Ethereum, and AVAX. Particularly, both short and long-term expiring options for Ethereum (ETH) continue to trade at a premium compared to call options, indicating the continuation of price decline speculations. On the other hand, investors are maintaining a long-term bullish trend in Bitcoin options.
Investors Expect Rise in Bitcoin and Decline in Ethereum
The Ethereum/Bitcoin (ETH/BTC) ratio formed a reverse scenario with a record of losses during risk aversion periods, increasing by more than 2% last week. However, option data tracked by Amberdata shows that investors are more inclined towards a stronger decline in the altcoin king due to their instinct for protection against potential downturns in weekly, one, two, three, and six-month timeframes. Therefore, they are turning to Ethereum put options. On the other hand, investors are seen to continue to focus on long-term bullish trend in Bitcoin and turn to call options.
The short and long-term ETH put-call ratio, which indicates the premium of purchases over sales, is currently well below zero. This is a sign of relatively higher prices for put options, which are used to provide protection against price declines. Put options are derivative contracts that give the buyer the right, but not the obligation, to sell the underlying asset at a predetermined price on or before a specific date. While an investor who invests in put options indirectly indicates a bearish trend in the market, an investor who turns to call options is inclined towards an upward trend.
In the case of Bitcoin, it is observed that there is a preference for selling in the weekly, one, and two-month trends, while the rest show a preference for buying. The persistent trend towards long-term BTC purchases may stem from the belief that the largest cryptocurrency will be the first beneficiary of a ultimate positive turn in the macroeconomic environment.
Bitcoin Remains a Macro Asset for the Crypto Market
The author of the Popular Crypto Is Macro Now newsletter, Noelle Acheson, wrote, “BTC continues to be a ‘macro’ asset for the crypto market and may see some strong inflows as the macro environment changes. […] Many large investors will continue to prefer BTC due to its liquidity, market capitalization, and relative stability. Therefore, we may see some ETH superiority in the ETF narrative, but BTC may perform better again when macro investor funds start to position themselves in cryptocurrencies.”
The crypto world is currently preparing for Bitcoin’s fourth block reward halving in April 2024. The block reward halving has paved the way for major bull runs by programmatically reducing the rate of supply expansion by 50%.
