Bitcoin [BTC]’s ever-dominant increase in the spot market (market cap) has left all rivals with a margin. Ethereum [ETH]the nearest rival still has miles and miles to go before it could catch up with the king coin.
But what would happen if we changed the battlefield to futures (the market) instead? Here’s how the tables have turned this year when comparing BTC and ETH.
All in the name of Merge
The upcoming Ethereum Merge has created positive hype around the network and the future it holds. The long-awaited merger would lead to a reduction in ETH issuance and bring a store of value to the asset.
Futures markets have reached a $1 trillion market cap following the hype, according to a new report from Tom Rogers, head of research at ETC Group. While doing so, Ethereum Futures surpassed Bitcoin in terms of trading volume.
In fact, last month (August) was “the first time since records began that Ethereum futures trading volume exceeded Bitcoin, at $1.07T across the month,” the report added.
Also Glassnode’s latest insight shed light on the same development. In this, the analysis depicted the big difference in the annual 3-month rolling basis between the two rivals.
(Three-month futures annualized rolling basis is the annualized return (percentage return) obtained by buying a spot asset and simultaneously selling a futures contract on it that expires in three months. Due to supply and demand factors, futures contracts often trade at a higher price than their spot counterpart.
This is used by traders to lock in the profit that is the difference between spot and futures prices, which currently played out perfectly for the largest altcoin.
ETH surpassed BTC’s traded volume on the futures market and attractiveness of spot hedge via short futures driven ETH into backwards. This means it showed a potential to rise as traders placed bullish bets on the same. (Backwardation is when futures prices are below the expected spot price and therefore rise to meet the higher spot price.)
Open interest – or the number of outstanding futures contracts – rose to more than $9 billion this week from less than $4 billion in July, data show. ETH has also been dominated by bullish call option traders as the Put/Call ratio (PCR) stood at 0.25.
In fact, at press time the rate was at 0.24, which is again a bullish sign.
To lose ground
Looking at BTC, the token remained in ‘contango’ and fundamentals indicated that “the bottom is in” as per Glassnode’s insight. While the Ethereum crowd’s celebration began, Bitcoin followers are becoming wary of BTC.
Bitcoin futures volume has fallen to $941 billion in August 2022, trailing its closest competitor, Ethereum Futures.
In fact, a stark contrast compared to the last two to three years, when Bitcoin has always been the one that is leagues ahead of Ethereum.