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Over the past few days, the price of Bitcoin (BTC) has underperformed Ether (ETH) by nearly 20%. Even though BTC appears to be struggling to break the $ 18,800 barrier, both cryptocurrencies show the same upward trend according to derivatives market data.
Ether is entering a parabolic rally as the launch of its Eth2 network progresses and this optimism is reflected in the options markets. Despite BTC’s lack of such price action, Bitcoin traders seem unmoved and data shows they are still wildly bullish.
Futures contracts for Ether and BTC are still bullish
The basic indicator analysis is a useful procedure as it compares the level of futures contracts with the current price on regular spot exchanges.
Healthy markets usually show an annualized base of 5% to 10%, in a situation known as contango. On the other hand, futures trading at a discount usually occurs during strongly bear markets.
The Ether futures base fluctuates between 10% and 20%, indicating bullish expectations. Instead of leaving Ether in a derivatives exchange, the seller would prefer to use them for staking. Therefore, it is natural to ask for a trade premium.
The BTC futures premium performed similarly, despite today’s lackluster negative performance. If traders had given up on expectations of a continued bull run, this indicator would have moved below the annualized 10%.
There is only one reason why a trader pays such a high premium on a futures contract, and the reason is the upside. This indicator can be interpreted as a fee for holding long leveraged positions.
Options traders are unwilling to take bearish positions
The 25 delta skew display also provides useful information on the sentiment and position of professional traders.
A positive delta skew of 25% indicates that put (sell) options cost more than similar call (buy) options, signaling bearish sentiment. On the other hand, a negative skew suggests an uptrend.
The indicator usually fluctuates between -20% and + 20% in neutral markets, although this has not been the case with Ether in recent weeks.
Notice how the Ether futures base hit extreme optimism levels on November 21st, which is very unusual.
This data suggests that options traders are unwilling to sell upside protection. At -20%, the skew indicator signals that derivatives investors remain bullish despite the 28% rally over the past seven days.
BTC options traders should be expected to be slightly less optimistic after today’s negative performance, but that was not the case.
The data shows that BTC options traders are currently remarkably optimistic, no matter how tough the past couple of days have been. Therefore, there is no indication of a change in sentiment coming from the derivatives markets.
Although there are several ways to read the same chart based on technical analysis, BTC did not accurately convey optimism.
Traders who prefer shorter time frames may have a bearish interpretation of the recent price action. Meanwhile, professional investors know how unpredictable BTC markets are. Therefore they are not ready to reduce their positive expectations on a whim.
For now, there seems to be no reason to doubt Bitcoin’s positive momentum. Even though Ether outperformed it, traders show the same confidence in both cryptocurrencies.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your research when making a decision.
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