Ethereum (ETH) saw a surprise 8% surge on November 9, breaking the $2,000 barrier and hitting a six-month high. The surge, triggered by news of BlackRock registering the iShares Ethereum Trust in Delaware, led to the liquidation of $48 million worth of short ETH futures contracts. The initial announcement was made by @SummersThings on a social network, and was later confirmed by Bloomberg ETF analysts.

iShares Ethereum Trust has just been registered in Delaware.

For context, BlackRock’s iShares Bitcoin Trust was registered in a similar manner 7 days before the ETF filed with the SEC. Details below.

(Announcement: I’ll move on @SynopticCom almost) pic.twitter.com/IYafIaxMzA

– Summers (@SummersThings) November 9, 2023

The news fueled optimistic expectations regarding a potential Ethereum ETF placement by BlackRock, a $9 trillion asset management firm. This speculation follows BlackRock’s iShares Bitcoin Trust registering in Delaware in June 2023, a week before the initial Bitcoin ETF filing. However, with no official statement from BlackRock, investors may have been hasty, although the asset manager’s massive influence in traditional finance leaves those betting against Ethereum’s success in a precarious position.

Professional traders have placed bullish bets on ETH using derivatives

To understand how professional traders are positioned after the spike, one must analyze ETH derivatives metrics. Typically, monthly Ethereum futures trade at a 5% to 10% annual premium compared to spot markets, indicating that sellers are requiring additional funds to postpone settlement.

The Ethereum futures premium, which jumped to 9.5% on November 9, hit its highest level in more than a year and broke above the neutral threshold of 5% on October 31. This shift ended a two-month down period and reduced demand for long-term leveraged loans. Attitudes.

To assess whether the break above $2,000 has led to excessive optimism, traders should examine the ether options markets. When traders expect a decline in the price of Bitcoin, the 25% delta skew tends to rise above 7%, while periods of excitement typically see a decline below negative 7%.

Ether options delta deviation of 25% turned from neutral to bullish on October 31, and the current -13% deviation is the lowest in over 12 months, but far from overly optimistic. This healthy level has been the norm for the past nine days, meaning that ethereum investors were anticipating upward momentum.

There is no doubt that the Ethereum bulls got the upper hand regardless of the spot ETF narrative as Ethereum rose 24% ahead of the BlackRock news, between October 18 and November 8. This price action reflects rising demand on the Ethereum network, as evidenced by top decentralized applications (DApps) 30-day volumes.

However, when analyzing the broader structure of the cryptocurrency market, especially retail indicators, there is some contradiction with the growing optimism and demand for leverage using ether derivatives.

Related: Bitcoin ETF launch may be delayed by more than a month following SEC approval

Retail indicators point to dormant demand for ETH and cryptocurrencies

For starters, Google searches for “buy Ethereum,” “buy Ethereum,” and “buy Bitcoin” have remained stagnant over the past week.

One might argue that retail traders usually lag behind an uptrend, usually entering the cycle a couple of days or weeks after key price marks and 6-month highs are reached. However, there has been a decline in demand for cryptocurrencies, when using stablecoins as a measure of the activity of Chinese retail traders.

The stablecoin premium measures the difference between USDTether (USDT) trades in China and the US dollar. Excessive buying demand tends to pressure the index above fair value by 100%, and during bear markets, Tether’s market supply gets overwhelmed, causing a discount of 2% or higher.

Currently, Tether’s premium over OKX is 100.9%, indicating balanced demand from retail investors. This level contrasts with the 102% recorded on October 13, for example, before the total market capitalization of cryptocurrencies jumped by 30.6% as of November 9. This goes on to show that Chinese investors have not yet placed excessive demand for fiat currencies. Crypto conversion using stablecoins.

In essence, it appears that Ethereum’s rise above $2,000 was driven by derivatives markets and the expectation of immediate approval of ETFs. A lack of retail demand is not necessarily an indicator of an impending correction. However, the hype around BlackRock’s Ethereum Trust track record, coupled with excessive leverage in ETH derivatives, is raising concerns, putting the $2,000 support level at stake.