This year, Ethereum has surpassed the leading cryptocurrency Bitcoin by more than 230%. Experts claim that the leading altcoin will rise even more.

Ether (ETH) has been outperforming Bitcoin (BTC) for months. The ETH/BTC pair has increased by more than 230 percent this year, and it was last recorded that on December 9, it broke a new record with a value of 0.089.

ETHBTC_2021-12-10_18-02-33

ETH's $490 billion market cap is equivalent to 54 percent of Bitcoin's $903 billion value. This rate was around 15% last year.

To analyze the rationale for this transformation or to predict the future, it is necessary to research the market structure of each cryptocurrency separately. For example, does the futures market premium show a similar trend across both cryptocurrencies? What about the long to short ratio of professional traders? These are the data needed to determine whether the current movement will continue.

Quarterly futures are the instruments of choice for whales and arbitrage desks, but they can seem complicated to individual traders due to their clearing dates and price differential from the spot markets. However, the key advantage of these quarterly contracts is the absence of a floating funding rate.

These fixed monthly instruments typically trade slightly above spot market prices, indicating that sellers are demanding more money to delay settlement longer. As a result, futures should trade at healthy markets at a premium of 5 to 15 percent per year. This is known as "contango" and is not exclusive to cryptocurrency markets.

BTC ETH futures basis

After comparing both charts, we can see that Bitcoin futures are trading at an annual average of 2.6 percent for March 2022 and 4.4 percent for June 2022. This compares to 2.9 and 5 percent of Ether, respectively. As a result, it turns out that whales and arbitrage tables are charging a larger premium for Ether, and it's a bullish indicator.

Bitcoin's long short rate has dropped

To effectively measure how professional traders are positioning, it is necessary to monitor the long short ratio of the top traders on the leading cryptocurrency exchanges. This data provides a broader view of traders effective net position by collecting data from multiple markets.

It's worth noting that exchanges collect data on top traders differently, as there is more than one way to measure customer engagement. Therefore, any comparison between different providers should be based on percentage changes rather than absolute numbers.

Long Short Ratio Positions

The long-to-short ratio of the largest Bitcoin traders was calculated at 1.39 on Dec. 5, currently averaging 1.21. Compared to 1.59 two weeks ago, this indicates that buyers (long-term traders) have reduced their risk by 24 percent.

ETH huobi top trader long short

Meanwhile, Ether whales and arbitrage tables showed a positive sentiment shift from December 5th after the long to short shifted from 1.0 to 1.16. When comparing average data as of November 25, long-short trades of the largest Ether traders fell 20 percent from 1.43.

Current derivatives data supports Ether as it currently shows a higher futures base rate. Also, the move from long to short by top traders since October 5 signals confidence at a sensitive time when ETH price has dropped 16 percent from its all-time high of $4,870.

Bitcoin traders may be lacking confidence as the price is 31 percent below the all-time high of $69,000 on Nov. There's no way of knowing if this is a cause or an effect. Still, judging by the futures premium and long-to-short data, Ether has enough momentum to continue to outperform.