Ethereum Reaches 6-Month High as BlackRock Spots ETF Buzz, But Where is the Retail Demand?

Ether (ETH) had a notable 8% rally on Nov. 9, surpassing the $2,000 mark and achieving its highest price level in six months. This surge was triggered by the news of BlackRock registering the iShares Ethereum Trust in Delaware, resulting in $48 million worth of liquidations in ETH short futures. This was initially reported by @SummersThings on a social network, later confirmed by Bloomberg ETF analysts.

The news sparked positive expectations regarding a potential Ether spot ETF filing by BlackRock, a company with a $9 trillion asset portfolio. This speculation follows BlackRock’s iShares Bitcoin Trust registry in Delaware in June 2023, a week before their initial spot Bitcoin ETF application. However, without any official statement from BlackRock, investors may have been too hasty, although the immense influence of the asset manager in traditional finance puts those betting against Ether’s success in a precarious position.

Difference between Web 1.0, 2.0, 3.0 and 4.0

Web 1.0, also known as the Read-Only Web, was the first era of the internet. It was characterized by static websites that provided users with information but did not allow them to interact or contribute. Web 2.0, or the Read-Write Web, ushered in the era of user-generated content, social media, and interactive websites. Web 3.0, or the Semantic Web, is focused on providing a more intelligent and personalized web experience. It uses artificial intelligence (AI) and machine learning (ML) to deliver relevant content to users. Web 4.0, or the Autonomous Web, is the next generation of the internet, which will be powered by AI, ML, and blockchain technology.

Professional traders placed bullish ETH bets using derivatives

To understand the positioning of professional traders following the unexpected rally, one should analyze the ETH derivatives metrics. Generally, Ether monthly futures trade at a 5%–10% annualized premium compared to spot markets, indicating that sellers require extra money to defer settlement.

The Ether futures premium, rising to 9.5% on Nov. 9, was the highest in over a year and broke above the 5% neutral threshold on Oct. 31. This shift ended a two-month bearish period and low demand for leveraged long positions.

To determine whether the break above $2,000 has caused excessive optimism, traders should examine the Ether options markets. When traders anticipate a drop in Bitcoin’s price, the delta 25% skew tends to rise above 7%, while periods of excitement typically see it dip below negative 7%.

The Ether options 25% delta skew shifted from neutral to bullish on Oct. 31, and the current -13% skew is the lowest in over 12 months, but far from being overly optimistic. Such a healthy level has been the norm for the past 9 days, suggesting that Ether investors were expecting the bullish momentum.

It’s clear that Ether bulls got the upper hand regardless of the spot ETF narrative as ETH rallied 24% before the BlackRock news, between Oct. 18 and Nov. 8. This price action reflects a higher demand for the Ethereum network, as indicated by the top decentralized applications (DApps) 30-day volumes.

Nevertheless, when examining the broader cryptocurrency market structure, particularly the retail indicators, there’s some inconsistency with the escalating optimism and demand for leverage using Ether derivatives.

Retail indicators point to dormant demand for ETH and cryptocurrencies

Google searches for “Buy Ethereum”, “Buy ETH” and “Buy Bitcoin” have been steady for the past week, suggesting that retail traders are lagging the bull runs. This can be seen by looking at the stablecoin premium, which is used to gauge Chinese crypto retail trader activity.

The stablecoin premium measures the difference between China-based peer-to-peer USD Tether (USDT) trades and the United States dollar. A premium above 100% suggests excessive buying demand, while a discount of 2% or higher indicates a bearish market.

At the moment, the Tether premium on OKX is 100.9%, which suggests that Chinese investors have not yet shown an excessive demand for fiat-to-crypto conversion using stablecoins. This contrasts with the 102% premium from Oct. 13, before the crypto total market capitalization jumped 30.6% until Nov. 9.

The recent rally of Ether above $2,000 appears to be driven by derivatives markets and the expectation of a spot ETF approval. However, the lack of retail demand, combined with the hype around BlackRock’s Ethereum Trust registry and excessive leverage longs in ETH derivatives, puts the $2,000 support level to the test.

To summarize, the difference between web 2.0 and web 3.0 can be seen in the Chinese retail investor activity, with the stablecoin premium and Google searches for “Buy Ethereum”, “Buy ETH” and “Buy Bitcoin” providing insight into the current demand.