Ethereum Price Hits 6month High Amid BlackRock Spot ETF Buzz, But Wheres The Retail Demand?

On November 9, Ethereum (ETH) saw an impressive 8% rise, reaching over $2,000 and its highest price in six months. The surge was sparked by news that BlackRock had filed for the iShares Ethereum Trust in Delaware, wiping out $48 million worth of short ETH futures contracts. The first announcement was made by @SummersThings on social media, then confirmed by Bloomberg ETF analysts.

The news has raised high hopes for the possible introduction of a spot ETF on Ethereum by $9 trillion asset manager BlackRock. This speculation comes a week ahead of the first Bitcoin ETF spot rollout in June 2023, when BlackRock's iShares Bitcoin Trust will be registered in Delaware. But in the absence of an official statement from BlackRock, investors may act too quickly, even if the asset manager's influence in traditional finance puts them in a precarious position to bet on Ethereum's success.

Professional traders bet on silver on ETH using derivatives.

To understand how professional traders are positioning themselves following the spill, it is necessary to analyze the parameters of ETH derivatives. Typically, monthly Ethereum futures contracts trade at a 5-10% annual premium on spot markets, indicating that sellers are demanding more money to extend settlement.

The Ethereum futures premium jumped to 9.5% on November 9, reaching its highest level in more than a year, and broke above the neutral 5% limit on October 31. The move ended a two-month downward spiral and reduced demand for long positions.

To assess whether the break above $2,000 has led to over-optimism, traders should examine the Ether options markets. When traders expect Bitcoin's price to decline, the 25% difference rises above 7%, but during positive times it usually falls below 7%.

The 25% spread for Ethereum options flipped from neutral to bullish on October 31, and the current -13% spread is the lowest in over 12 months but is overly optimistic. These healthy levels have been common over the past nine days, meaning Ethereum investors have been waiting for upward momentum.

Regardless of the ETF's immediate announcement, there is no doubt that Ethereum bulls have the upper hand: Ethereum rose 24% between October 18 and November 8, according to BlackRock News' 30-day volume of top decentralized applications (DApps).

However, when analyzing the broader structure of the cryptocurrency market, especially retail indicators, there are some inconsistencies with the ever-increasing optimism and desire to use Ethereum derivatives.

RELATED: Bitcoin ETF Launch Could Be Delayed More Than a Month After SEC Approval

Retail indicators point to latent demand for ETH and cryptocurrencies.

First, Google searches for “buy ethereum,” “buy ethereum,” and “buy bitcoin” remained unchanged last week.

Retailers are almost certainly left behind. But the Stalkcoin premium is used as a measure of cryptocurrency retail activity in China, reducing demand for cryptocurrencies.

The stablecoin premium measures the difference between peer-to-peer transactions in the Chinese dollar (USDT) and the US dollar. Overbought demand tends to push the indicator above the actual 100%, and in bear markets the Tether market is flooded with supply, resulting in a drop of 2% or more.

Currently, Tether's premium to OKX is 100.9%, indicating proportional demand from retail investors. This level can be compared, for example, with 102% recorded on October 13, before the total market capitalization of cryptocurrencies increased by 30.6% until November 9. Transfer cryptocurrency using stablecoins.

Essentially, Ethereum's rise above $2,000 appears to be driven by primary markets and immediate ETF approval. Lack of retail demand is not necessarily a sign of an impending correction. However, bullish sentiment around BlackRock's Ethereum Trust Leger coupled with long highly leveraged ETH derivatives positions is a cause for concern and a test of the $2,000 support level.