Ethereum (ETH) experienced a surprising 8% increase on November 9th, breaking the $2000 mark and reaching its highest price level in six months. The news of BlackRock registering iShares Ethereum Trust in Delaware triggered this surge, leading to the liquidation of $48 million worth of ETH short futures
Ethereum (ETH) experienced a surprising 8% increase on November 9th, breaking the $2000 mark and reaching its highest price level in six months. The news of BlackRock registering iShares Ethereum Trust in Delaware triggered this surge, leading to the liquidation of $48 million worth of ETH short futures. The initial announcement was made by @ SummersThings on social media, and later confirmed by Bloomberg ETF analysts.
IShares Ethereum Trust has just been registered in Delaware. In terms of background, BlackRock's iShares Bitcoin Trust registered in a similar manner 7 days prior to submitting its ETF application to the US Securities and Exchange Commission. The details are as follows. Announcement: I will soon be redirected to @ SynopsicCom
Pic. Twitter. com/IYafIaxMzA Summers (@ SummersThings) November 9, 2023
This news has sparked optimistic expectations that BlackRock, a $9 trillion asset management company, may submit an Ethereum spot ETF. This speculation occurred after BlackRock registered at the iShares Bitcoin Trust Registry in Delaware in June 2023, a week before they first applied for a spot Bitcoin ETF. However, due to BlackRock's failure to issue an official statement, investors may have taken the lead, despite the asset management company's huge influence in the traditional financial sector putting those who bet on the success of Ethereum in a dangerous position.
Professional traders use derivatives to place bullish bets on ETH
In order to understand the positioning of professional traders after unexpected rebounds, it is necessary to analyze ETH derivative indicators. Usually, compared to the spot market, the annualized premium for Ethereum monthly futures is 5% -10%, indicating that sellers need additional funds to delay settlement.
The Ethereum futures premium jumped to 9.5% on November 9th, reaching its highest level in over a year, and broke the neutral threshold of 5% on October 31st. This shift ended a two month bearish period and low demand for leveraged long positions.
In order to assess whether exceeding $2000 has led to excessive optimism, traders should examine the Ethereum options market. When traders expect Bitcoin prices to decline, the 25% delta deviation often rises to over 7%, while during the excitement period, it usually drops below negative 7%.
On October 31st, the 25% delta deviation of Ethereum options shifted from neutral to bullish, with the current -13% deviation being the lowest in over 12 months, but far from being overly optimistic. In the past 9 days, such a healthy level has been the norm, which means that Ethereum investors are expected to experience a bull market trend.
Undoubtedly, regardless of the claim of spot ETFs, Ethereum bulls have the upper hand, as Ethereum rose 24% before the release of BlackRock news from October 18th to November 8th. This price trend reflects higher demand for Ethereum networks, as well as the 30 day trading volume of top tier decentralized applications (DApps).
However, when analyzing the broader cryptocurrency market structure, especially retail indicators, there are some inconsistencies in the optimism and demand for leveraging using Ethereum derivatives.
Related: After approval by the US Securities and Exchange Commission, the launch of Bitcoin ETFs may be delayed for more than a month
Retail indicators show a dormant demand for ETH and cryptocurrencies
Firstly, Google's search for "Buy Ethereum", "Buy Ethereum", and "Buy Bitcoin" has been stagnant over the past week.
Some people may say that retail traders typically lag behind the bull market and enter the cycle a few days or weeks after the main price mark and 6-month high are hit. However, when using the stable currency premium as a measure of the activity of Chinese cryptocurrency retail traders, the demand for cryptocurrency has been declining.
The stable currency premium measures the difference between China's equivalent US dollar Tether (USDT) trading and the US dollar. Excessive purchasing demand often puts pressure on the indicator above 100% fair value, while in bearish markets, Tether's market quotation is flooded, resulting in a discount of 2% or higher.
Currently, OKX's Tether premium is 100.9%, indicating a balanced demand from retail investors. For example, this level is in stark contrast to 102% on October 13th, where the total market value of cryptocurrencies jumped by 30.6% from October 13th to November 9th. This further indicates that Chinese investors have not yet raised excessive demand for the use of stable currency to convert fiat currency into cryptocurrency.
Essentially, the rebound of Ethereum above $2000 seems to be driven by the derivatives market and expectations for spot ETF approval. The lack of retail demand is not necessarily an indicator of upcoming adjustments. However, the hype surrounding the BlackRock Ethereum Trust Registry, coupled with the high leverage of Ethereum derivatives, has raised concerns and put the $2000 support level to the test.
This article is for reference only and is not intended or should be considered as legal or investment advice. The views, ideas, and opinions expressed in this article are solely the author's views, ideas, and opinions, and do not necessarily reflect or represent Cointellectric's views and opinions.
Disclaimer: The content of this article is sourced from the internet. The copyright of the text, images, and other materials belongs to the original author. The platform reprints the materials for the purpose of conveying more information. The content of the article is for reference and learning only, and should not be used for commercial purposes. If it infringes on your legitimate rights and interests, please contact us promptly and we will handle it as soon as possible! We respect copyright and are committed to protecting it. Thank you for sharing.(Email:[email protected])
