On November 9, Ethereum (ETH) surprisingly rose by 8%, surpassing the $2,000 mark and reaching its highest price level in six months. The surge was triggered by news that BlackRock had registered the iShares Ethereum Trust in Delaware, resulting in $48 million worth of ETH short futures liquidation. The initial announcement was made on social by @SummersThings and later confirmed by Bloomberg ETF analysts.
The iShares Ethereum Trust was just registered in Delaware.
For context, BlackRock’s iShares Bitcoin Trust was registered in a similar manner seven days before it filed its ETF application with the SEC. Details are below.
(Announcement: I’m moving to @SynopticCom soon) pic.twitter.com/IYafIaxMzA
— Summers (@SummersThings) November 9, 2023
The news sparked optimism about a possible Ethereum spot ETF application filed by $9 trillion asset manager BerRock. The speculation follows BlackRock’s registration of the iShares Bitcoin Trust in Delaware in June 2023, a week before its first spot Bitcoin ETF filing. However, with no official statement from BlackRock, investors may have already taken action, although the asset manager’s outsized influence in traditional finance puts those betting on Ethereum’s success in a precarious position.
Professional traders use derivatives to make bullish ETH bets
To understand how professional traders are positioning themselves following an unexpected rise, one should analyze the ETH Derivatives indicator. Typically, Ethereum monthly futures trade at an annualized premium of 5%–10% compared to the spot market, suggesting sellers require additional funds to delay settlement.
On November 9, the Ethereum futures premium jumped to 9.5%, the highest level in more than a year, and broke through the 5% neutral threshold on October 31. This shift ends a two-month bearish period and low demand positions for leveraged bulls.
To assess whether a break above $2,000 is leading to over-optimism, traders should check the Ethereum Alternatives market. The delta 25% bias tends to rise above 7% when traders expect Bitcoin prices to fall, while periods of excitement often drop below negative 7%.
The 25% delta bias on Ethereum options shifted from neutral to bullish on October 31, and the current -13% bias is the lowest in 12 months, but is far from overly optimistic. Such healthy levels have been the norm over the past nine days, which means Ethereum investors are looking forward to bullish momentum.
There is no doubt that Ethereum bulls have the upper hand regardless of what the spot ETFs say, as Ethereum was up 24% between October 18 and November 8 before the BlackRock news.This price action reflects higher demand for the Ethereum network, as the top decentralized applications (DApps) 30-day roll.
Still, when analyzing the broader cryptocurrency market structure, particularly retail indicators, there are some inconsistencies between the optimism surrounding Ethereum derivatives and the heightened demand for leverage.
related: Bitcoin ETF launch could be delayed by more than a month after SEC approval
Retail Indicators Show Dormant Demand for ETH and Cryptocurrencies
First, Google searches for “buy Ethereum,” “buy Ethereum,” and “buy Bitcoin” have been stagnant over the past week.
One could argue that retail traders often lag behind bull markets, often entering cycles days or weeks after hitting major price marks and 6-month highs. However, when using stablecoin premiums as a measure of Chinese cryptocurrency retail trader activity, demand for cryptocurrencies has been declining.
The stablecoin premium measures the difference between China’s peer-to-peer USD Tether (USDT) transactions and the U.S. dollar. Excessive buying demand often forces the metric above 100% of fair value, and during bear markets, Tether’s market is flooded with quotes, resulting in discounts of 2% or more.
Currently, the premium of Tether to OKX is 100.9%, indicating that the demand from retail investors is relatively balanced. For example, this level contrasts with 102% from October 13th until November 9th, when the total cryptocurrency market capitalization jumped by 30.6%. This is further evidence that Chinese investors have not yet made excessive demand for fiat currencies. Cryptocurrency conversion using stablecoins.
Essentially, Ethereum’s rise above $2,000 appears to be driven by expectations of derivatives markets and spot ETF approval. Lack of retail demand does not necessarily indicate an imminent correction. However, the hype surrounding the BlackRock Ethereum Trust registration, coupled with excessive leverage long positions in ETH derivatives, has raised concerns that support at $2,000 is being put to the test.
This article is for general information purposes only and is not intended to be, and should not be construed as, legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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