Data shows professional traders are currently more bullish on Ethereum than Bitcoin

Most traders noticed that Ether ( ETH ) the price significantly outperformed Bitcoin ( BTC ) for months now and the ETH / BTC ratio has r...


Most traders noticed that Ether (ETH) the price significantly outperformed Bitcoin (BTC) for months now and the ETH / BTC ratio has risen over 230% in 2021 and recently hit a new high of 0.089 BTC on December 9.

ETH / BTC pair at Coinbase. Source: TradingView

To put it in perspective, Ether’s $ 490 billion market cap currently represents 54% of Bitcoin’s $ 903 billion. This ratio ended 2020 at just 15%, so it’s safe to conclude that some “turnaround” has occurred. It might still be a far cry from what the Ethereum maximalists imagined, but it’s still a thoroughly respectable race.

Instead of analyzing the rationale for the move or, worse yet, predicting the outcome based on some loose expectations, analysts should explore the market structure of each coin individually.

For example, is the futures market premium facing a similar trend on both coins and how does the long / short ratio of professional traders compare? These are the most relevant metrics for determining whether a movement has the strength to continue.

The term premium favors Ether

Quarterly futures are the preferred instruments of arbitrage bureaus and whales, but due to their settlement date and the difference in price to spot markets, they can seem complicated to retail traders. However, the most notable advantage of these quarterly contracts is the absence of a fluctuating funding rate.

These fixed month instruments typically trade slightly above the spot market price, indicating that sellers are asking for more money to delay settlement for longer. Therefore, futures contracts should trade at an annualized premium of 5-15% in healthy markets. This situation is known as “contango” and is not exclusive to crypto markets.

Bitcoin and Ether futures base. Source: Laevitas.ch

After comparing the two charts, we can see that Bitcoin futures are trading at an average annualized premium of 2.6% for March 2022 and 4.4% for June 2022. This compares to 2.9% and 5% Ether, respectively. As a result, it becomes clear that the whales and referees are demanding a higher premium on the ether and this is a bullish indicator.

Bitcoin’s long / short ratio has declined

To effectively measure the positioning of professional traders, investors should monitor the long / short ratio of top traders on major crypto exchanges. This metric provides a broader view of the effective net position of traders by collecting data across multiple markets.

It should be noted that exchanges collect data on top traders differently, as there are several ways to measure net client exposure. Therefore, any comparison between different vendors should be made on percentage changes instead of absolute numbers.

Long / short ratio of the best Bitcoin traders. Source: Coinglass

The long / short ratio of top Bitcoin traders currently stands at an average ratio of 1.21, down from 1.39 on December 5. Compared to the figure of 1.59 from two weeks ago, this indicates that buyers (buyers) have reduced their exposure by 24.%. Again, the absolute number is less important than the overall change in the time frame.

Long / short ratio of the best Ether traders. Source: Coinglass

Meanwhile, Ether Whales and Arbitration Bureaus showed a positive change in sentiment from Dec.5 after the long-to-short fell from 1.0 to 1.16. Comparing the November 25 average data, the long to short positions of top Ether traders were down 20% from 1.43.

Data shows Ether traders are more confident than Bitcoin traders

Current derivatives data favors Ether as the asset is currently showing a higher base forward rate. In addition, the improvement in the long-to-short of top traders since October 5 signals confidence at a delicate time when the price of ETH is down 16% from its all-time high of $ 4,870. .

Bitcoin investors may lack confidence as its price sits 31% below the November 10 record of $ 69,000. There is no way to know if this is a cause or a consequence. Still, judging by the term premium and long-to-short data, Ether appears to have enough momentum to continue to outperform.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.