Ether outperforms Bitcoin in the options market for the first time

Crypto analysts say that Ethereum may soon overtake Bitcoin in terms of market capitalization rankings. Photo: Chukrut Budrul/SOPA Images/LightRocket via Getty Images

Ether flips bitcoin for the first time in the world’s largest options market.

Cryptocurrency analysts see this as the latest indication that Ethereum (USD-ETH) may soon overtake Bitcoin in terms of market capitalization rankings.

Currently, Bitcoin (USD-BTC), which fell nearly 2% on Tuesday to $22,800 (£18,077), tops the cryptocurrency rankings by market capitalization.

As of the time of writing, the market capitalization of Bitcoin is around $436 billion compared to $190 billion for Ethereum.

Despite this, Ethereum has followed Bitcoin’s slide: Ether is down nearly 6% in the past 24 hours.

Read more: Live cryptocurrency rates

On Monday, the world’s largest options exchange, Deribit, saw $5.7 billion locked in in ether options contracts.

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

Ethereum integration

There are a lot of traders interested in trading ether on bitcoin ahead of the upcoming ethereum merger in September.

The long-awaited “merger” of ethereum will see the network become a “full proof of stake” blockchain.

The merger is set to take place in September and will make the low-power Ethereum blockchain, ditching the high-powered ‘Proof of Work’ method for verifying transactions that Satoshi Nakamoto pioneered with the founding of Bitcoin.

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

The integration of Ethereum Proof of Stake could open up the blockchain to inbound investment from institutional funding, which has been cautious in the past due to the carbon footprint associated with Proof of Work.

Read more: Ethereum: Two rays of hope for crypto investors as crash stabilizes

Coinbase (COIN), one of the largest cryptocurrency exchanges in the world, expects that local institutional clients in the United States will want to generate revenue by accumulating ether after the merger.

Coinbase Prime now provides enterprises with a comprehensive storage experience.

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

Staking 32 ether creates an ethereum node, which is equivalent to mining the bitcoin blockchain.

Read more: Vitalik Buterin says Ethereum supply is shrinking after ‘merge’ upgrade

Staking ethereum, in proof of the stock consensus mechanism, allows the node to verify transactions and receive rewards with generous returns.

In ethereum 2.0, ether will become a deflationary cryptocurrency with the annual issuance of the cryptocurrency reduced by 90%.

Investors are bullish on Ethereum’s expectation that a successful merger to prove the consensus-stake mechanism and annual issuance restriction will raise the price of its parent token, Ether. Basically, this means reducing the number of tokens from the ether.

How do options work?

In the Deribit cryptocurrency options market, the amount of ether call options — the right to buy ether at a specified price over a certain period of time — has increased.

These call options are not equally matched with the corresponding call options – the right to sell ether at a specified price at a later date.

This increased demand for buying orders over selling was seen as an indication that Ethereum might make an upward movement. While increasing the put options provide protection against lower prices.

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Traders are queuing up with a lot of ether call options for a possible price hike on Ethereum after the merger.

The sliding open interest rate on buying is seen as further evidence of the potential for “volatility” – as Ethereum outperforms Bitcoin in terms of overall market capitalization.

The term refers to the hypothetical moment when Ethereum overtakes Bitcoin as the world’s largest cryptocurrency by total value.

Cryptocurrency investor and influencer Ben Armstrong tweeted on Tuesday: “We are monitoring the early stages of ETH trading in volatile dollars.”

With the consolidation process just one month away, many cryptocurrency analysts are noting that volatility is getting closer every day.

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