Smart Money Is Betting on ETH Over BTC — Here Are 3 Telltale Clues

Market Dynamics Show Ethereum Gaining Ground on Bitcoin in Institutional Circles

Despite lagging in price performance, Ethereum (ETH) is gaining momentum behind the scenes as institutional traders begin to show a clear preference for ETH over Bitcoin (BTC) in the derivatives market.

Bitcoin, which recently broke above $110,000 and is up over 16% year-to-date, continues to benefit from macro tailwinds and inflows into U.S. spot ETFs. Yet under the surface, a series of key indicators now suggest that capital is beginning to rotate toward Ethereum, which has fallen nearly 20% in the same period — despite its dominance in DeFi and tokenization infrastructure.

Options Market Signals a Bullish Shift Toward ETH

Recent data from Deribit, the leading crypto options exchange, highlights a growing bullish sentiment for Ether relative to Bitcoin. Both BTC and ETH exhibit positive 25-delta risk reversals, which implies that traders are skewed toward buying calls over puts — a traditional sign of optimism.

What sets ETH apart is the pricing premium: Ether call options are now trading at a higher implied volatility than comparable Bitcoin calls, indicating that the market is assigning greater upside potential to ETH in the near term.

Institutional Participation Tilting Toward Ether

On the Chicago Mercantile Exchange (CME), a favorite platform for traditional finance players, the divergence is even clearer. While Bitcoin futures open interest has surged by 70% since April’s lows — reaching $17 billion — that growth has stalled in the past week.

Meanwhile, Ether futures have seen a 186% spike in notional open interest to $3.15 billion, with consistent growth accelerating over the last two weeks. This shift suggests that institutions are beginning to reallocate their exposure — or are positioning in anticipation of a catch-up move in ETH.

Futures Premiums and Perpetual Rates Favor ETH

Additional confirmation comes from futures premiums and funding rates. One-month ETH futures now trade at an annualized premium of 10.5%, the highest level since January, compared to Bitcoin’s 8.74%.

In offshore perpetual markets, ETH funding rates — which reflect the cost of holding a long position — have climbed toward 8%, while BTC’s remain below 5%. These elevated rates underscore increased demand and trader willingness to pay a premium to maintain long ETH exposure.

It’s possible that BTC’s premiums are being held in check by cash-and-carry arbitrage strategies, which are non-directional and can mask true sentiment.

Conclusion: A Rotation in Progress?

The data points to a subtle yet notable rotation in institutional sentiment — away from Bitcoin’s recent price leadership and toward Ethereum’s longer-term potential. From derivatives pricing to capital flow into CME contracts, the evidence suggests that big money is beginning to bet that Ether may soon play catch-up in the broader crypto market rally.

While price performance has yet to confirm this shift, the underlying positioning signals should not be ignored.

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