Ether Under Pressure as Options Market Flags Elevated Downside Risk
Traders are growing cautious on ether (ETH), with options pricing now reflecting higher near-term risk for the asset compared to bitcoin (BTC). The shift comes as ETH’s rally shows signs of fatigue, prompting a defensive tilt in derivatives markets.
Options Skew Turns Bearish for ETH
Short-dated ether options are showing a clear bearish bias. According to Deribit data, 25-delta risk reversals for ETH have dropped to between -2% and -7% for August and September expirations. That means traders are paying a premium for protective puts over calls — a classic indicator of downside hedging.
By comparison, bitcoin’s risk reversals remain closer to neutral, with puts trading just 1%–2.5% above calls. This suggests ETH is currently viewed as the riskier asset of the two.
The 25-delta risk reversal is a standard options metric used to measure sentiment. A negative value points to greater demand for downside insurance and often precedes or accompanies increased market stress.
ETH Loses Momentum After Strong July
Ether surged nearly 48% last month, outperforming bitcoin and briefly topping $3,940 — its highest since January. But the rally has cooled sharply in recent sessions. ETH slid more than 6% over the last 24 hours to $3,600, while BTC fell roughly 3% to $114,380, according to CoinDesk data.
Analysts say ETH’s recent gains were driven in part by ETF speculation and rotation flows, but these are proving unsustainable without fresh catalysts.
Macro Headwinds Reinforce Risk Aversion
The defensive shift comes amid renewed dollar strength and fading hopes of near-term rate cuts from the Federal Reserve. The U.S. dollar index (DXY) has climbed back above 100, and market participants are now less confident about the Fed easing policy in September.
“Unless macro conditions soften or ETH-specific catalysts return, traders are likely to keep favoring bitcoin’s relative stability,” said Matt Mena, research strategist at 21Shares. “Right now, the market’s telling us that downside protection in ETH is worth the premium.”
With Friday’s U.S. nonfarm payrolls data on deck, further volatility could be ahead — and options markets suggest traders are already positioning for it.
