Options Market Turns Defensive on Ether as Traders Price In Higher Downside Risk
The options market is signaling growing caution around ether (ETH), with short-dated contracts now reflecting greater downside risk compared to bitcoin (BTC). The shift follows a sharp reversal in ETH’s price action after a strong July rally.
Traders Pay Up for ETH Downside Protection
Data from Deribit shows that 25-delta risk reversals for ether — a popular measure of sentiment in options markets — are pricing puts at a 2% to 7% premium over calls for August and September expirations. The negative skew indicates increased demand for downside protection, suggesting traders see ETH as more vulnerable than BTC in the near term.
Bitcoin, by contrast, is showing a more balanced risk profile. Its risk reversals are less extreme, with puts trading at a smaller 1% to 2.5% premium, highlighting a comparatively stable outlook.
A 25-delta risk reversal compares the implied volatility of calls and puts equidistant from the current spot price. A wider gap favoring puts is typically interpreted as a sign of bearish sentiment or hedging demand.
Ether’s Momentum Falters
Ether had outpaced bitcoin in July, gaining 48% and touching a high of $3,941 — its strongest level since January. But the rally has since cooled, with ETH falling over 6% in the last 24 hours to $3,600. Bitcoin, meanwhile, dropped 3% to $114,380, per CoinDesk data.
The fading momentum has some traders reassessing ether’s short-term prospects. Analysts suggest the rally may have been driven more by speculative flows and ETF-related optimism than by sustained fundamentals.
With macro uncertainty still looming — including a stronger U.S. dollar and hawkish Fed stance — risk appetite across digital assets has taken a hit, prompting traders to rotate into more defensive positions.
