Ether More Favored by Traders as Volatility Against Bitcoin Hits Highest Since FTX Crash

Ethereum's ether ETH token, which has been in the shadows of bitcoin BTC for a long time, is now becoming the new favorite.

Data from TradingView shows that the spread between Volmex's annualized 30-day ether implied volatility index (EVIV) and bitcoin's 30-day index (BVIV) has jumped to 34%, the highest since November 2022. Back then, the FTX exchange went bust, destroying billions in investor wealth.

The widening spread indicates that the market expects significantly larger price swings for ether, and perhaps the broader crypto market, compared to bitcoin in the coming weeks.

Ether has recently outshone bitcoin in terms of price gains, largely due to renewed institutional interest in the cryptocurrency. Notably, in the past 24 hours, ether has risen 8% to $2,728, outperforming almost every major cryptocurrency, including market leader bitcoin, which has gained just 1%, CoinDesk data show.

"Ethereum is pumping up with new money. Over the past two weeks, Ethereum ETFs have attracted $812 million, the biggest amount since the beginning of this year," Alex Kuptsikevich, chief market analyst at The FxPro said in an email.

While inflows into the ether spot ETFs have picked up pace, BTC ETFs have managed to draw in less than $400 million in the past two weeks, according to data source SoSoValue.

According to the Singapore-based trading firm QCP, several factors have aligned in favor of the ether bulls.

"Looking ahead, macro tailwinds are aligning for ETH. With the GENIUS Act advancing in the US Senate, Circle’s IPO discussions resurfacing, and stablecoins gaining regulatory traction, Ethereum’s native role in tokenization and settlement rails may be primed for outsized structural upside," QCP said in a market update.

The bias for ether is also evident from the fact that on options exchange Deribit, ETH call options are trading at a premium of at least 2% to 3% relative to puts out to the March 2027 expiry. On the contrary, BTC calls are trading at 0.5%-1.5% premium, according to data source Amberdata.

In other words, traders are paying more for the upside exposure in ether compared to bitcoin.

"ETH options markets have surged with 30-day call-skew hitting 6.24% and funding rates spiking to 0.009%, while the term structure of volatility has reinverted once more," analytics firm Block Scholes said in its daily report.

Read more: Asia Morning Briefing: BTC Slips Below $110K as 'Signs of Fatigue' Emerging