Excitement surrounding the upcoming Ethereum “merger” — a technology upgrade designed to make the blockchain more efficient — has been stirring the crypto market lately. This, in turn, has led Ethereum bulls on crypto Twitter to ask, “Flip who?” in reference to a future moment when Ether (ETH) overtakes Bitcoin (BTC) as the top coin by market cap.
Although the actual “flip” may take a long time (Bitcoin loyalists swear it will never happen), the options market tells a different story. Due to the “bullish momentum” surrounding the Ethereum merger, Ether’s open options have “flipped” Bitcoin’s open options on popular exchange Deribit for the first time, CoinDesk reported Monday.
Open interest rate options refer to the number of active derivative contracts or the options that are open but not yet closed or expired. Ether options open interest on Deribit this morning was $5.7 billion, up 32% from bitcoin options’ $4.3 billion.
“Ethereum’s proof-of-work-to-proof-of-stake merge story is pulling the entire market up right now,” Daniel Keller, co-founder of blockchain network Flux, told Fortune regarding the merger. “Options markets at this point are pure speculation that ETH 2.0 will be a superior product and with it a high risk, high reward game.”
The merger — and whether the upgrade goes smoothly — is part of that high risk, says Corey Miller, head of growth at dYdX.
“There is no question that Bitcoin’s market-driven thesis of being an inflation hedge has taken a dent over the past six months. Given that BTC hasn’t performed as well as many had hoped, some investors may do so [be] their eyes on the next piece,” Miller told Fortune.
The next and final important test for the merger is scheduled to take place between August 6th and 12th. If all goes well, the actual merger is expected to happen in the week of September 19, as prominent Ethereum developer Tim Beiko said recently. Until then, there will likely be further price action and further implications for derivatives.
Nonetheless, the ether options market “flip” and surrounding hype might just be noise for now, but if it continues, the so-called “flip” might be more realistic than previously thought.
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