In a notable shift within the cryptocurrency markets, institutional interest appears to be tilting toward ether (ETH) over bitcoin (BTC)—despite bitcoin’s dominance in market capitalization and recent all-time highs. While BTC surpassed $110,000 and gained over 16% in 2025, ether has underperformed year-to-date with a 20% decline. Yet beneath the surface, key derivatives indicators suggest a growing bullish bias for ETH among sophisticated investors.
The futures and options markets—long considered a barometer for institutional sentiment—are signaling that big money is increasingly positioning for an ETH rebound. Here are three data-driven clues pointing to ether’s rising favor in the crypto market.
Options Market Shows Stronger Bullish Sentiment for Ether
One of the clearest signals comes from the options market, particularly on Deribit, the leading crypto derivatives exchange. Traders use options to express directional views or hedge risk, and the structure of these trades reveals prevailing sentiment.
A critical metric here is the 25-delta risk reversal, which measures the difference in implied volatility between call and put options. A positive reading indicates higher demand for calls—reflecting bullish sentiment.
As of late May 2025, both BTC and ETH show positive risk reversals, meaning traders are generally more inclined to buy call options than puts. However, ETH’s risk reversal is significantly more elevated than BTC’s, suggesting relatively stronger bullish positioning for ether.
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This divergence implies that while both assets have optimistic outlooks, institutional and high-net-worth traders are placing greater confidence in ETH’s upside potential. Given that ether remains nearly 84% below its 2021 peak, the relative undervaluation compared to bitcoin may be fueling this renewed interest.
CME Futures Open Interest Soars for Ether
Another compelling indicator lies in the open interest of futures contracts traded on the Chicago Mercantile Exchange (CME)—a regulated venue widely used by institutional investors. Open interest represents the total number of outstanding derivative contracts and serves as a proxy for capital inflow.
Since the market correction in early April 2025:
- Bitcoin CME futures open interest rose about 70%, reaching over $17 billion.
- Ether CME futures open interest surged 186%, climbing to $3.15 billion—with accelerating growth in the past two weeks.
While BTC’s open interest has plateaued near $17 billion, ETH’s continues to climb, indicating fresh institutional capital is flowing into ether futures at a faster pace.
This divergence is significant. The CME is not typically used by retail traders; its user base consists largely of hedge funds, family offices, and asset managers. Their increasing exposure to ETH suggests a strategic reweighting of crypto portfolios in favor of Ethereum’s ecosystem.
Futures Premiums and Funding Rates Favor Ether
Beyond open interest, futures premiums—also known as basis—offer insight into market momentum and trader appetite. The premium reflects the difference between futures prices and the spot price, annualized to show expected returns.
At the time of writing:
- One-month Ether futures on CME carried an annualized premium of 10.5%, the highest since January.
- Bitcoin futures showed a lower annualized premium of 8.74%.
A higher premium signals strong demand for leveraged long positions and reflects optimism about future price appreciation. The fact that ETH’s premium has outpaced BTC’s—even amid weaker spot performance—suggests traders expect a catch-up rally.
This trend extends to offshore perpetual markets as well:
- Annualized funding rates for ETH perpetual futures have approached 8%, indicating longs are paying a premium to maintain positions.
- In contrast, BTC funding rates remain below 5%, showing comparatively softer demand.
High funding rates can sometimes precede price rallies, as they reflect aggressive positioning by directional traders. The sustained strength in ETH funding suggests growing conviction in its near-term upside.
Why Institutional Investors May Be Turning to Ether
Several fundamental factors may be driving this shift:
- Ethereum’s Dominance in DeFi and Tokenization
Ethereum remains the backbone of decentralized finance (DeFi), hosting over 60% of total value locked (TVL) across protocols. It also leads in real-world asset (RWA) tokenization, NFTs, and Layer-2 scaling solutions—making it a critical infrastructure layer for Web3 innovation. - Upcoming Network Upgrades
Although not discussed in current price action, ongoing improvements like proto-danksharding and further EIPs aim to enhance scalability and reduce fees—potentially unlocking new use cases and investor appeal. - Relative Valuation Opportunity
With BTC trading near all-time highs and ETH still far from its 2021 peak, many institutions may view ether as a more attractive entry point with higher asymmetric return potential.
FAQ: Understanding the Shift Toward Ether
Q: Why are institutions favoring ether if bitcoin is performing better?
A: Performance isn’t the only factor. Derivatives data shows institutions are betting on future performance. Ether’s lower price relative to its history and Ethereum’s foundational role in DeFi make it a compelling value proposition.
Q: What does a rising risk reversal mean for ether?
A: A rising 25-delta risk reversal means traders are buying more call options than puts, signaling increased bullish sentiment. It often precedes price rallies or reflects hedging against short positions.
Q: Is open interest a reliable indicator of institutional activity?
A: Yes—especially on regulated platforms like CME. Unlike retail-heavy exchanges, CME requires compliance and margin standards that attract professional money.
Q: Could high futures premiums lead to a price correction?
A: Not necessarily. While extremely high premiums can create pullbacks if unwound suddenly, they currently reflect strong demand rather than unsustainable leverage.
Q: Does this mean bitcoin is losing relevance?
A: No. Bitcoin remains the benchmark digital asset and a macro hedge. However, this shift indicates that ether is gaining traction as a complementary—perhaps even preferred—play on crypto’s broader adoption.
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Final Thoughts: Ether Gains Momentum in Institutional Portfolios
While bitcoin continues to lead in market cap and media attention, the derivatives landscape tells a nuanced story. From options positioning to futures open interest and funding dynamics, multiple indicators point to growing institutional confidence in ether.
The data suggests that big money isn’t just passively holding ETH—it’s actively building leveraged positions, hedging downside risks, and pricing in meaningful upside. With Ethereum’s ecosystem continuing to evolve and expand, this shift may be early evidence of a broader re-rating in the making.
For investors monitoring smart money flows, these clues shouldn’t be ignored. Ether may be poised for a resurgence—not because of hype, but because the numbers are starting to align.
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