Ethereum (ETH) options contract transaction volume surpassed Bitcoin (BTC) options contract transaction volume for the first time in history.
This condition occurs as news of Ethereum 2.0 approaches, bringing the possibility of a flippening story, namely the increase in market capitalization of Ethereum surpassing Bitcoin, though not anytime soon.
In The Options Market, ETH Volume Outnumbers BTC
Deribit, the world’s largest crypto options contract, reported it.
The amount of this transaction volume is calculated using open interest data or the number of options contracts purchased and sold within a given time period.
In general, open interest data is data that shows how large the volume of transactions is because it does not specifically show purchase data for call (buy) or put (sell) options contracts.
Deribit, on the other hand, has a unique mechanism that provides information about the amount of open interest in put and call contracts.
Im August 2, 2022, the transaction volume or open interest in Ethereum options contracts has reached $5.65 billion.
This is the highest open interest of all time, and it reportedly outnumbers the volume of open interest in Bitcoin options contracts at the moment.
At the same time, the volume of Bitcoin options contracts stands at $4.35 Billion, which is a significant difference from the difference between these two contracts previously.
This is the first time in history that the transaction volume of any Ethereum-related contract or asset has exceeded the transaction volume of any other contract or asset.
This condition appears to have increased investor confidence in Ethereum and revived the flippening narrative.
Flippening is a story in which the market capitalization of Ethereum exceeds the market capitalization of Bitcoin, implying that there is more money in circulation on Ethereum than on Bitcoin.
For now, the narrative still looks far-fetched as Bitcoin’s market capitalization is still around twice as large as Ethereum’s.
The upcoming Ethereum 2.0, which is also the cause of this change in the volume ratio of options contract transactions, is shifting the narrative away from the impossible.
Still Because of Ethereum 2.0
The increase in the volume of Ethereum options contract transactions appears to be caused by Ethereum 2.0, which is expected to be released in August or September 2022.
Despite the possibility of being pushed back to the end of 2022, traders seem to have been looking for early positions to get high profits.
With Ethereum 2.0, Ethereum will transition from a Proof of Work blockchain to a Proof of Stake blockchain.
The old Ethereum network that uses Proof of Work will be merged into a new network with a Proof of Stake mechanism via Ethereum 2.0, creating a narrative of “The Merge,” which is defined as a merger.
Later in Ethereum 2.0, the amount of ETH in circulation will be reduced by 90%, with a total deflation rate of 1.6 percent per year, implying that supply will be reduced by 2.6 million ETH per year.
The prediction data is formed by the Ultra Sound Money site which is a site with Ethereum blockchain data and contains a simulation of the amount of Ethereum supply if Ethereum 2.0 has launched.
As a result, many traders and long-term investors are likely to take call positions in anticipation of the impending shortage, which usually leads to price appreciation.
The majority of open interest today is in call options contracts, indicating that many traders and investors believe the price of Ethereum will rise.
Given that Deribit handles 90% of global crypto options contract transactions, the assumption that the majority believes the price of Ethereum will rise is even stronger.
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