Ether’s Risky Bet: Options Market Flashes Warning Signs as ETH Outpaces BTC in Risk Pricing

Ether traders are staring down a volatility gap—and it's not in their favor. The options market now prices ETH as the riskier play versus Bitcoin, signaling a potential shift in crypto's pecking order.

The fear gauge spikes

Implied volatility for ETH options just overtook BTC's, a rare divergence that last preceded major price swings. Market makers aren't hedging—they're bracing.

Smart money or dumb money?

While ETH's staking yields keep institutional desks hooked, the derivatives bleed suggests traders see storm clouds ahead. 'Yield chasers forget options are the canary in the coal mine,' quips one Wall Street defector turned DeFi degenerate.

The crypto casino's odds just got interesting. Place your bets—or fold.

In comparison, bitcoin's short-term put options traded at 1%-2.5% premium to calls, suggesting relatively restrained downside fears.

A put option gives the purchaser the right to sell the underlying asset at a predetermined price on or before a specified future date. A put buyer is implicitly bearish on the market, seeking to hedge spot market holdings or profit from a price decline. A call buyer is implicitly bullish on the market.

The 25-delta risk reversal is an options strategy that comprises a long put position and a short call option (or vice versa) with a 25% delta, meaning the strike price for both options is relatively far from the underlying asset's market rate.

Risk reversals are widely tracked in the FX markets to gauge sentiment across time frames. Positive values represent bullish sentiment, while negative values suggest the reverse.

Ether, the native token of the ethereum blockchain surged 48% in July, reaching a seven-month high of $3,941 and outperforming BTC's 8% gain by a wide margin. Most of the advance, however, occurred in the first half of the month, with the rally losing steam on concerns it stemmed purely from corporate adoption and lacked support from on-chain activity.

Ether was recently trading at $3,600, down more than 6% over 24 hours, while Bitcoin had lost 3% to $114,380, according to CoinDesk data.