ETH surpasses BTC in derivatives amid SEC leadership changes

In Dubai, UAE, on November 28, 2024, Bybit, the world’s second-largest cryptocurrency exchange by trading volume, released a new weekly derivatives analytics report in collaboration with Blocks Scholes. The report highlighted a significant performance shift in the cryptocurrency market, with Ethereum (ETH) surpassing Bitcoin (BTC) in open interest, indicating a growing interest among investors. This rise in ETH performance coincides with the announcement of U.S. SEC Chair Gary Gensler's impending departure at the end of the Biden administration's term. This shift has sparked optimism in the crypto market, particularly as traders anticipate less regulatory scrutiny in the future. The report detailed how ETH's open interest has seen an upward trend in recent weeks, contrasting with a decline in BTC's open interest. The analysis revealed that ETH has been capturing a larger share of daily trading volumes compared to BTC, particularly over the last six months. The favorable sentiment in the market can be largely attributed to expectations that a new SEC Chair may adopt a more crypto-friendly approach after Gensler's last day on January 20, 2025. This expectation of regulatory relief seems to have invigorated investor confidence in ETH. Additionally, the report noted that BTC has experienced a price retreat from the significant threshold of $100,000. This decline has affected the options market, as seen in the flattening of the at-the-money (ATM) volatility term structure, with some short-tenor options trading below 60%. This pattern mirrors broader market trends observed since the recent U.S. election, where lower realized volatility has been evident. Despite these challenges, open interest in both calls and puts for BTC remains unchanged, indicating a stable yet cautious sentiment among traders. On the other hand, ETH options exhibit a slightly more bullish sentiment as compared to BTC options, reflecting the market's recalibration following the post-election rally. Call options for ETH continue to dominate both trading volumes and open interests, suggesting that investors are more inclined to bet on ETH’s future performance. This sentiment is indicative of the broader trends in the cryptocurrency market, highlighting Ethereum's growing importance and appeal, especially during times of potential regulatory shift. Investors and traders remain vigilant as they navigate this transitional phase while preparing for potential changes in the regulatory landscape as the new SEC leadership takes charge.