Ethereum's institutional demand potentially neutralizing bearish options trading?
In the past few weeks, institutional investors have been making significant moves in the world of cryptocurrency, with a notable surge in investments in new spot Ethereum Exchange-Traded Funds (ETFs). Leading the charge is BlackRock, which has loaded $314.9 million worth of Ethereum (ETH) into these ETFs.
This momentum has propelled the total ETH held by spot ETFs to 6.42 million ETH, equating to a staggering $27.66 billion. This represents 5.31% of the circulating Ethereum supply and a total cumulative inflow of over $12 billion since the launch of these ETFs.
This trend is not limited to institutional investors alone. Corporate treasuries such as SharpLink Gaming and BitMine Immersion Tech have also made substantial purchases. SharpLink recently acquired $667 million in ETH, while BitMine holds 1.5 million ETH, valued at over $8 billion, contributing to the over $20 billion in Ethereum reserves held by institutions and corporations.
However, while these investments paint a rosy picture, recent data suggests a more cautious outlook for Ethereum. The trend of bearish options and unstaking on Ethereum contrasts with a moderately bullish outlook for Bitcoin, as reported by Decrypt.
Ethereum's posturing is also bearish, signaling a mild correction by the end of the month, according to Sean Dawson, head of research at Derive. This trend, which started with Bitcoin, has now extended to Ethereum, indicating that Ethereum investors are becoming increasingly cautious.
Deribit's data shows a large increase in open interest of Ethereum puts since the end of August. For the September 12 expiry, almost 10% of Ethereum volume in the last 48 hours is on the $3600 and $3800 puts, as traders brace for a sharp pullback.
This defensive positioning in options markets is mirrored by an unstaking spree, as evidenced by a decline in Ethereum netflow. After an inflow of 348,236 ETH on August 25th, netflow declined to 183 ETH.
The Ethereum market has also seen a decline in perpetual open interest, with a drop from $24.6 billion to $24.1 billion since September 1, according to Coinanlyze.
Andrew Melville, head of research at crypto derivatives analytics platform Block Scholes, reported that the price of bearish bets on Ethereum has become more expensive than bullish ones.
In contrast, Bitcoin's open interest has grown bullish in the same period. Bitcoin ETFs saw net outflows of $751.12 million for August despite a positive $440.71 million last week.
This growing divide between bullish and bearish sentiments is a significant development in the cryptocurrency market. As institutional and corporate investors continue to pour money into Ethereum ETFs, the market will be closely watching to see how this cautious trend unfolds.
