Ether overtakes bitcoin in the options market for the first time

Ether toppled bitcoin for the first time on the world’s largest options exchange.

Crypto analysts see this as the latest signal that ethereum (USD-ETH) may soon overtake bitcoin in market cap rankings.

Right now, bitcoin (USD-BTC), which fell nearly 2% to $22,800 (£18,077) on Tuesday, has consistently topped the cryptocurrency charts by market capitalization.

At the time of writing, Bitcoin has a market capitalization of around $436 billion, compared to Ethereum’s $190 billion.

Ethereum, however, has followed the fall of bitcoin: ether has fallen nearly 6% in the past 24 hours.

Read more: Live Crypto Prices

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

That’s 32% more than the $4.3 billion locked up in bitcoin open options trades on the same market.

Ethereum merger

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

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

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

The merger will not only significantly improve Ethereum’s environmental impact, but will 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 inbound investment from institutional finance, which has remained 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 the crash stabilizes

One of the world’s largest cryptocurrency exchanges, Coinbase (COIN), predicts that US domestic institutional clients will want to generate yield by staking ether post-merger.

Coinbase Prime now offers institutions an end-to-end staking experience.

The story continues

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

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

Read more: Ethereum supply will shrink after ‘Merge’ upgrade, says Vitalik Buterin

Ethereum staking, in the proof-of-stake consensus mechanism, allows the node to verify transactions and receive rewards through generous returns.

In Ethereum 2.0, Ether will become a deflationary cryptocurrency, with annual cryptocurrency issuance reduced by 90%.

Investors are bullish on Ethereum which predicts that a successful merger with a proof-of-stake consensus mechanism and annual issuance restriction will appreciate the price of its native token, Ether. Essentially, this means fewer ether tokens to circulate.

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 given time frame – has increased.

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

This increased demand for calls versus puts was seen as an indicator that Ethereum might be on the upside. While an increase in put options provides protection against price declines.

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The reversal

Traders are lining up numerous ether call options for a possible bull run on ethereum post-merger.

The rolling put-call open interest ratio was seen as further evidence that the “rollover” may be happening – where Ethereum overtakes 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 aggregate value.

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

With the merger looming in just over a month, many crypto analysts say the reversal is getting closer by the day.

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