It’s more expensive to use derivatives to prevent ether (ETH) drop than Bitcoin
The emotional change occurs after weeks of big money in favor of ether over larger peers.
According to Amberdata data, the risk reversal of the option Ether 25-Delta, which expires in August and September, was trading from -2% to -7%. This means that options that provide protection against price drops carry a premium of 2% to 7% over call options, reflecting obvious concerns about potential downside risks.
ETH option metrics. (Deribit/Amberdata)
By comparison, Bitcoin’s short-term put options trade calls at 1%-2.5% premium, suggesting a relatively restrained downside fear.
The put option grants the buyer the right to sell the underlying assets at a given price before a specific future date. Put buyers are implicitly bearish to the market and are trying to hedge profits from holdings or falling prices in the spot market. Cole buyers are implicitly bullish in the market.
BTC option metrics. (Deribit/Amberdata)
The 25-delta risk reversal is an optional strategy consisting of a short call option with a long put position and a 25% delta (or vice versa). This means that the strike prices for both options are relatively far from the market rate of the underlying asset.
Risk reversal is widely tracked in the Forex market and measures sentiment across the time frame. Positive values represent bullish emotions, while negative values indicate the opposite.
Ether, the native tokens for the Ethereum blockchain surged 48% in July, reaching a seven-month high of $3,941, significantly outpacing BTC’s 8% profit. However, much of the progress took place in the first half of the month, with the rally losing steam purely from corporate recruitment and concerns that it had not received support from activities on the chain.
According to Coindesk data, Ether recently fell by more than 6% at $3,600 and more than 6% in 24 hours, while Bitcoin fell by 3% to $114,380.
