Ether Hits $2,000 Amid BlackRock iShares Ethereum Trust Registration and Rising Demand
Summary:
Ether (ETH) broke the $2,000 mark on Nov. 9, an 8% rally sparked by BlackRock's iShares Ethereum Trust registration in Delaware. This surge led to $48 million liquidations in ETH short futures. The development has incited speculation about a possible Ether spot ETF filing by BlackRock. However, investors may be acting prematurely as no official statement from BlackRock has been released. Despite this, the rising demand for Ethereum is evident with an increased use in decentralized applications and a 24% rally before the BlackRock news.
Ether (ETH) saw an unexpected rally of 8% on Nov. 9, breaking through the $2,000 mark to hit a six-month high. BlackRock's iShares Ethereum Trust registration in Delaware fuelled this surge, leading to liquidations worth $48 million in ETH short futures. Bloomberg ETF analysts later confirmed the initial announcement posted by @SummersThings on a social media platform.
The development has sparked hopeful speculation about a possible Ether spot ETF filing by BlackRock, an asset manager dealing with $9 trillion. This conjecture is in line with BlackRock's move to register the iShares Bitcoin Trust in Delaware in June 2023, a week before they lodged their first spot Bitcoin ETF application. However, in the absence of an official statement from BlackRock, investors might have misfired. Yet Blackrock’s substantial sway in conventional finance puts those positing against Ether's triumph in a risky position.
Analyzing ETH derivatives metrics espouses an understanding of the position of professional traders after the unexpected rally. Generally, Ether's monthly futures trade at an annualized premium of 5%–10% compared to spot markets, implying that sellers seek more money to delay settlement.
On Nov. 9, the Ether futures premium elevated to 9.5%, the highest in over 12 months, surpassing the 5% neutral threshold on Oct. 31. This alteration terminated a two-month bearish phase and lowered demand for leveraged long positions.
To determine whether the surge over $2,000 has caused excessive optimism, Ether options markets should be scrutinized. When traders foresee a decrease in bitcoin's price, the delta 25% skew typically ascends above 7%, and during periods of excitement, it usually falls below negative 7%.
Ether bulls undoubtedly have the upper hand, given ETH soared by 24% before the BlackRock news, between Oct. 18 and Nov. 8. These price movements signify an increased demand for the Ethereum network, mirrored by the top decentralized applications' (DApps) 30-day volumes.
However, there's a discrepancy with the surging optimism and demand for leverage using Ether derivatives when examining the broader cryptocurrency market structure and particularly the retail indicators.
Google searches for “Buy Ethereum”, “Buy ETH” and “Buy Bitcoin” have stayed steady for the past week. There has also been a reduction in demand for cryptocurrencies, as seen by the decline in stablecoins premium, a measure for Chinese crypto retail trader activity.
Retail investors appear to have a balanced demand, as the Tether premium on OKX is presently at 100.9%. This differs from the 102% on Oct. 13, before the crypto total market capitalization soared by 30.6% until Nov. 9. Thus, Chinese investors are yet to evidence an excessive demand for fiat-to-crypto conversion using stablecoins.
In summary, Ether’s recent rally above $2,000 seems motivated by derivatives markets and the prospect of spot ETF approval. The absence of enough retail demand is not necessarily a sign of an impending correction. However, the hype surrounding BlackRock's Ethereum Trust registry and the abundance of leverage longs in ETH derivatives, brings the $2,000 support level under scrutiny. Please note that this article is simply for informational purposes and should not be seen as legal or investment advice. The opinions expressed here are solely the author’s and do not necessarily represent the views and opinions of Cointelegraph.
Published At
11/9/2023 11:40:40 PM
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