The eagerly anticipated U.S. exchange-traded funds (ETF) directly investing in ether (ETH) are slated to commence trading by mid-July. Preceding this launch, trends in the ether options market on Deribit closely emulate the sentiment observed in bitcoin (BTC) options six months ago, with one crucial divergence that traders must heed.

As of the current analysis, ether’s 30-day options skew—indicative of the premiums traders are willing to pay for asymmetric payouts in either direction—stands at approximately 3%, according to Amberdata. This positive skew signifies a greater propensity to pay for call options, which provide an asymmetric payout favoring an upward price movement over the forthcoming four weeks. A call option confers the right to purchase an asset at a predetermined price within a specific timeframe, signifying bullish sentiment, whereas a put option signifies a bearish outlook.

Additionally, ether call options expiring in six months are trading at a premium relative to puts, with the skew hovering around 5%. This implies that traders are positioning for ether strength leading up to the ETF launch and over the next six months, mirroring the strategy adopted approximately two weeks before BTC ETFs began trading on January 11. At that time, BTC’s 30-day and 180-day skews were around 3.5% and 5%, respectively.

This bullish positioning aligns with expectations that spot ether ETFs—permitting investors to gain exposure to the asset without owning it—will unleash substantial mainstream institutional demand, potentially worth billions of dollars. BTC ETFs have already attracted net inflows exceeding $14 billion, per Farside Investors.

“The imminent ETH ETF launches are poised to significantly impact ETH as they introduce a new wave of investors. With ETH’s supply being highly concentrated among long-term holders, ETF inflows could exert a pronounced effect if proportionately substantial like Bitcoin’s,” stated analytics firm IntoTheBlock in their latest newsletter.

Sell the Fact?

On January 10, Bitcoin’s 30-day options skew turned bearish, signaling a renewed preference for puts and hinting at a classic sell-the-fact pullback post-ETF debut. Consequently, BTC’s price declined by over 15% by January 23, dipping below $40,000 before rebounding to record highs exceeding $70,000 in March. Ether traders should remain vigilant for a potential bearish flip in the 30-day options skew in the forthcoming days.

Absence of Euphoria

A key distinction in ether options pricing compared to bitcoin in January suggests the ether market is not as euphoric as BTC was seven months ago, potentially weakening the argument for a sell-the-fact pullback. BTC’s seven-day skew frequently exhibited a stronger bias for calls than the 30-day skew ahead of the ETF debut, indicating heightened optimism or imminent price increase expectations.

Typically, investors anticipate higher volatility or uncertainty in the distant future compared to the near term, resulting in longer duration skews returning higher values than shorter ones. This pattern persists in the ether market, where the 7-day skew remains below the 30-day skew, indicating a relatively measured bullish bias.

Read more: Ethereum Investment Products Witness Largest Outflows Since 2022 Amid Anticipation of Ether ETFs

The broader market sentiment is more subdued than in late 2023 and early January. Ether has declined from $4,000 to $3,350 since late May, struggling to match bitcoin’s rally to new record highs in the first quarter. This discrepancy likely stems from analyst uncertainty regarding the demand for ether ETFs matching the benchmark set by bitcoin ETFs. “Bitcoin had the first mover advantage, potentially saturating the overall demand for crypto assets in response to spot ETF approvals,” noted JPMorgan analysts, led by Nikolaos Panigirtzoglou, in May, predicting ether ETFs could see $3 billion in net inflows this year.

However, Ilan Solot, co-head of digital assets at Marex Solutions, suggests that the prevailing pessimism might lead to ether outperformance. “The pervasive pessimism is a strong setup for outperformance. Similar to the sell-the-news strategy, many will attempt to replicate from the BTC ETF,” Solot commented in an email.

Read more: Bitcoin ETF Exodus: A Deep Dive into Recent Trends

“Nonetheless, I fear many inflow predictions might be overestimated by comparing them to BTC ETF numbers (like ‘ETH will attract 20% of BTC ETF inflows’). The prevalence of delta-neutral trades [carry trades] might obfuscate the comparison and overestimate potential price impacts,” he added.