Ethereum Emerges as Institutional Favorite — 3 Market Indicators Reveal ETH Bias

Growing Bullish Sentiment for Ether Outpaces Bitcoin in Derivatives Markets

Recent market indicators reveal a rising bullish bias toward Ether (ETH) compared to Bitcoin (BTC), signaling a significant shift in trader sentiment within the crypto space.

The futures and options markets, often viewed as a reflection of institutional “big money” positioning, show increasing support for Ether, currently priced at around $2,661.90, over Bitcoin, which trades near $107,556.80.

Bitcoin’s Strong Year, Ether’s Recent Underperformance

Bitcoin, the largest cryptocurrency by market capitalization, has recently soared past $110,000, marking new all-time highs. Data from CoinDesk shows Bitcoin has gained over 16% so far this year, buoyed by favorable macroeconomic conditions and steady inflows into spot Bitcoin exchange-traded funds (ETFs).

In contrast, Ether has declined approximately 20% this year, despite Ethereum’s continued dominance in decentralized finance (DeFi) and tokenization sectors. However, this performance gap may soon narrow as key market metrics point to growing optimism around Ether.

Options Market Reveals Stronger Bullish Positioning on Ether

Deribit options data highlights a more pronounced bullish stance on Ether compared to Bitcoin. For context, options give holders the right, but not the obligation, to buy (call option) or sell (put option) an asset at a specified price before expiration.

Both BTC and ETH show positive 25-delta risk reversals, an indicator measuring the difference in demand and implied volatility between calls and puts — a positive reading suggests a tilt toward call options, or bullish bets.

Notably, Ether’s risk reversals are priced higher than Bitcoin’s, indicating traders are willing to pay a premium to back Ether’s upside potential relative to Bitcoin.

Diverging Trends in CME Futures Open Interest

Institutional activity measured by CME futures open interest further supports this bullish tilt toward Ether. Since the market drop in early April, the notional value of active Bitcoin futures contracts has increased roughly 70%, surpassing $17 billion according to data from Velo.

However, Bitcoin futures open interest has plateaued over the past week. Conversely, Ether futures open interest has surged by 186% to about $3.15 billion, with growth accelerating in recent weeks.

This divergence suggests institutional investors are increasingly allocating capital to Ether futures.

Futures Premiums and Funding Rates Signal Ether Optimism

The strength of Ether’s bullish sentiment is also reflected in futures premiums. One-month Ether futures are trading at an annualized premium of 10.5%, the highest since January, compared to Bitcoin’s futures premium of 8.74%.

Elevated futures premiums often reflect strong buying demand and market optimism, indicating traders are more bullish on Ether. This is noteworthy given that Ether still trades around 84% below its 2021 all-time high.

It’s possible that Bitcoin’s futures premium is being moderated by non-directional cash-and-carry arbitrage strategies, which may keep its basis suppressed without reflecting bearish sentiment.

Similarly, offshore perpetual futures funding rates show a divergence: Ether funding rates have climbed close to 8%, while Bitcoin’s remain below 5% — underscoring greater eagerness to hold long Ether positions.