Ether (ETH) experienced a surprising 8% rally on November 9, breaking through the $2,000 barrier and reaching its highest price level in six months. This surge, sparked by the news that BlackRock registered the iShares Ethereum Trust in Delaware, resulted in liquidations worth $48 million in ETH short futures. The initial announcement was made by @SummersThings on a social network, later confirmed by Bloomberg ETF analysts.
The iShares Ethereum Trust has just registered in Delaware.
For context, BlackRock's iShares Bitcoin Trust was similarly registered 7 days before filing the ETF application with the SEC. Details below.
[announcement: I’m moving to @SynopticCom soon] pic.twitter.com/IYafIaxMzA
- Summers (@SummersThings) November 9, 2023
The news fueled optimistic expectations regarding a possible introduction of an Ether spot ETF by BlackRock, a $9 trillion asset manager. This speculation follows BlackRock's iShares Bitcoin Trust registration in Delaware in June 2023, a week before its initial launch. Bitcoin ETF spot application. However, without an official statement from BlackRock, investors may have jumped the gun, although the asset manager's enormous influence on traditional finance leaves those betting against Ether's success in a precarious position.
Professional traders placed bullish bets on ETH using derivatives
To understand how professional traders are positioned after the surprise rally, it is worth analyzing the metrics of ETH derivatives. Typically, monthly Ether futures trade at a 5% to 10% annualized premium compared to spot markets, indicating that sellers are demanding additional money to postpone settlement.
The Ether futures premium, which jumped to 9.5% on November 9, marked the highest level in over a year and surpassed the neutral threshold of 5% on October 31. This change ended a two-month bearish period and low demand for long leveraged contracts. positions.
To assess whether the break above $2,000 has generated excessive optimism, traders should examine the Ether options markets. When traders anticipate a drop in Bitcoin price, the 25% delta bias tends to rise above 7%, while periods of enthusiasm typically see it fall below negative 7%.
Ether options' 25% delta bias moved from neutral to bullish on October 31, and the current bias of -13% is the lowest in over 12 months, but is far from overly optimistic. Such a healthy level has been the norm for the past 9 days, meaning Ether investors were anticipating the bullish momentum.
There is no doubt that Ether bulls took the lead regardless of the ETF spot narrative, as ETH rose 24% before the BlackRock news, between October 18 and November 8. This price action reflects increased demand for the Ethereum network, as reflected by the top decentralized applications (DApps) 30 days volumes.
Still, when analyzing the broader structure of the cryptocurrency market, especially retail indicators, there is some inconsistency with the growing optimism and demand for leverage using Ether derivatives.
Related: Bitcoin ETF launch could be delayed by more than a month after SEC approval
Retail Indicators Point to Dormant Demand for ETH and Crypto
For starters, Google searches for “Buy Ethereum,” “Buy ETH,” and “Buy Bitcoin” have been stagnant for the past week.
One could argue that retail traders tend to lag bull runs, typically entering the cycle a couple of days or weeks after major prices and six-month highs have been reached. However, there has been declining demand for cryptocurrencies when the stablecoin premium is used as an indicator of the activity of Chinese retail cryptocurrency traders.
The stablecoin premium measures the difference between the China-based peer-to-peer USD Tether (USDT) operations and the US dollar. Excessive buying demand tends to push the indicator above 100% fair value, and during bear markets, Tether market supply floods, causing a discount of 2% or more.
Currently, the Tether premium on OKX is 100.9%, indicating balanced demand from retail investors. Such a level contrasts with 102% on October 13, for example, before the total cryptocurrency market capitalization increased by 30.6% through November 9. This shows that Chinese investors have not yet presented excessive fiat-to-fiat demand. Crypto conversion using stablecoins.
In essence, Ether's rally above $2,000 appears to have been driven by derivatives markets and the expectation of a spot ETF approval. The lack of retail demand is not necessarily an indicator of an impending correction. However, the hype surrounding BlackRock's Ethereum Trust registration, coupled with excessive leverage in ETH derivatives, is raising concerns, testing the $2,000 support level.
This article is for general information purposes and is not intended to be and should not be taken 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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:max_bytes(150000):strip_icc()/GettyImages-912288266-8b6adbc20b2c4cbc9ce489237cbfd70c.jpg?w=75&resize=75,75&ssl=1 "Blackrock May Be Considering an Ether ETF, Ether Price Jumps")
