Data shows that professional traders are currently more optimistic about Ethereum than Bitcoin


Most traders have noticed the ether (Ethereum) The price has seriously outperformed Bitcoin (Bitcoin) Over the past few months, the ETH/BTC ratio has risen by more than 230% in 2021, and recently hit a new high of 0.089 BTC on December 9.

The ETH/BTC pair on Coinbase. Source: TradingView

In the long run, the market capitalization of 490 billion USD currently accounts for 54% of Bitcoin’s 903 billion USD. This rate was only 15% at the end of 2020, so it is safe to say that some “rollovers” have occurred. It may be a far cry from the imagination of Ethereum extremists, but it is still a considerable run.

Analysts should not analyze the reasons for this move, or worse, should not predict the results based on loose expectations, but should explore the market structure of each token separately.

For example, does the market premium of futures face the similar trend of the two tokens, and how does the long-short ratio of professional traders compare? These are the most relevant indicators used to determine whether the exercise has continued strength.

Futures premium is good for Ether

Quarterly futures are the tool of choice for whales and arbitrage platforms, but due to their settlement dates and price differences from the spot market, they may seem complicated to retail traders. However, the most significant advantage of these quarterly contracts is the lack of fluctuating financing rates.

The transaction price of these fixed-month instruments is usually slightly higher than the spot market price, which indicates that sellers are asking for more funds to withhold settlement for a longer period of time. Therefore, the annualized premium of futures in a healthy market should be 5% to 15%. This situation is called “contango” and is not unique to the crypto market.

Bitcoin and Ethereum futures basis. Source: Laevitas.ch

After comparing the two charts, we can see that the annualized premiums of Bitcoin futures in March 2022 and June 2022 average 2.6%, while the annualized premiums of Ethereum are 2.9% and 5%, respectively. Therefore, it is clear that whales and arbitrage platforms require a higher premium for Ethereum, which is a bullish indicator.

Bitcoin’s long-short ratio has fallen

In order to effectively measure the positioning of professional traders, investors should monitor the long-short ratios of top traders on leading cryptocurrency exchanges. This indicator provides a broader view of the effective net position of traders by collecting data from multiple markets.

It is worth noting that the exchange collects data from top traders in different ways because there are multiple ways to measure the net exposure of customers. Therefore, any comparison between different suppliers should be based on percentage changes rather than absolute numbers.

The long-short ratio of top Bitcoin traders. Source: Coinglass

The long-short ratio of top Bitcoin traders currently averages 1.21, down from 1.39 on December 5. Compared with 1.59 two weeks ago, this shows that buyers (longs) have decreased by 24%. Once again, the importance of absolute numbers is lower than the overall change in the time frame.

The long-short ratio of top Ethereum traders. Source: Coinglass

At the same time, after the long-to-short rise from 1.0 to 1.16, Ether Whale and arbitrage platforms began to show positive emotional changes from December 5th. When comparing the average data on November 25, the long and short positions of top Ethereum traders decreased by 20% from 1.43.

Data shows that Ethereum traders are more confident than Bitcoin traders

The current derivatives data is in favor of Ether, as the asset currently shows a higher futures benchmark interest rate. In addition, the long-to-short improvement of top traders since October 5th shows that people are confident in the delicate period of ETH falling 16% from its all-time high of $4,870.

Bitcoin investors may lack confidence because its price is 31% below the all-time high of $69,000 set on November 10. There is no way to know if this is the cause or the result. Nevertheless, from the perspective of futures premium and long-short data, Ether seems to have enough motivation to keep outperforming the market.

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