Ether Futures Premiums Surge 10.5% as Institutions Favor ETH Over BTC

Ether has been increasingly favored by big money in the cryptocurrency market, as indicated by several key indicators. The futures and options market, which serves as a proxy for institutional investment, has shown a growing preference for ether over bitcoin. This shift is evident in the options market, where ether's 25-delta risk reversals are more expensive than bitcoin's, suggesting a stronger bullish sentiment towards ether.

In the options market, a call option represents a bullish bet on the market, while a put option provides protection against price drops. The positive 25-delta risk reversals for both BTC and ETH indicate a bias towards call options. However, the higher cost of ETH risk reversals compared to BTC risk reversals shows that traders are relatively more bullish on ether.

Another indicator of institutional preference for ether is the notional open interest in CME futures. Since the early April crash, the open interest in CME bitcoin futures has risen by roughly 70% to over $17 billion. However, the growth has stalled above $17 billion over the past seven days. In contrast, ether's open interest has jumped 186% to $3.15 billion since the early April crash, with the growth accelerating over the past two weeks. This diverging trend suggests that institutions are increasingly leaning towards ether.

The bias for ether is also evident in the relative richness of premiums in ether futures. As of the time of writing, one-month Ether futures boasted an annualized premium of 10.5%, the highest since January. Meanwhile, bitcoin futures premium was 8.74%. Elevated premiums indicate optimism and strong buying interest, often signaling a bullish trend. Therefore, the relative richness of ether futures premium suggests traders are more bullish on ETH compared to BTC.

There is also a possibility that BTC's basis may have been held lower by cash and carry arbitrage traders. A similar divergence is observed on offshore exchanges, where annualized funding rates, representing the cost of holding long positions in ETH perpetual futures, has neared the 8% mark. Meanwhile, BTC's funding rates hold below 5%. This further supports the notion that big money is increasingly favoring ether over bitcoin in the cryptocurrency market.