Institutional traders are prioritizing bitcoin over ether exposure so far in 2023, according to a report from digital asset analysis firm Arcane Research.
Open interest in bitcoin (BTC) futures listed on the derivatives giant Chicago Mercantile Exchange (CME) has climbed 6% this year while CME’s ether (ETH) futures have declined by 29% in open interest, Arcane Research said.
Open interest is the total number of outstanding derivative contracts that have not been settled for an asset.
Joe DiPasquale, CEO of crypto fund manager BitBull Capital, told CoinDesk that institutional investors’ preference for BTC represented “the safest choice in a bear market.” He noted that Ethereum’s upcoming protocol updates might be raising concerns about an increased “risk of things going wrong,” and added that the Shanghai hard fork, which will allow validators who help operate the network to withdraw 16 million staked ETH, “is expected to add selling pressure.”
DiPasquale also said that BTC’s role could also serve as the base currency in all altcoin pairs, meaning when the market drops other cryptocurrencies would lose value in both U.S. dollar and BTC terms.
“By gaining exposure to BTC, investors can also hedge against such losses, and potentially even gain more during the initial phase of a bull run, since it is typically led by bitcoin rising in price,” he said.