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Exclusive BlackRock Opens $7.8 Billion Price Arbitrage Window for Ethereum (ETH) – Trading Expert Reveals Full Details

4 mins
Updated by Geraint Price
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In Brief

  • Ethereum (ETH) price smashed the elusive $2,000 resistance last week, after Blackrock filed an application for spot ETH exchange-traded fund (ETF).
  • Bitget’s chief research analyst told BeInCrypto that the increase in ETH derivatives market liquidity could open up a $7.3 billion arbitrage window.
  • Ethereum funding rates have skyrocketed to an all-time high of 0.034% as ETH traders showed strong inclination to hold long positions.
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Ethereum price broke past the landmark $2,100 milestone last week, after BlackRock filed an application for spot exchange-traded funds (ETFs). Bitget’s chief research analyst explains how this could impact ETH price action and trading patterns in the coming weeks.

Ethereum price entered a breakout toward the four-month peak of $2,150. Recent changes in ETH trading patterns reveal that investors are showing strong inclination to hold out for future profit opportunities.

BlackRock ETH Spot ETF Approval Will Bring Mainstream Recognition

Ethereum price raced to $2,150 after BlackRock’s proposed application for ETH Spot ETF hit the news on Nov. 9. And since then, the bulls have fiercely defended the vital $1,900 support territory.  

Ryan Lee, the chief research analyst of Bitget crypto exchange, opines that shifts in ETH derivatives trading patterns triggered by BlackRock’s application have contributed to Ethereum’s positive price action over the past week. 

In an exclusive interview with BeInCrypto, Ryan Lee explained that BlackRock’s official application for an ETH ETF, similar to the previous BTC ETF application, is expected to bring mainstream institutional recognition and capital allocation to Ethereum.

Interestingly, after the Nov. 9 announcement, the Ethereum price performance overtook Bitcoin. ETH/BTC exchange rate climbed by 10% within 24 hours. 

“Some institutions may be redirecting funds previously bet on BTC to ETH, seeking potentially greater returns,” said Ryan Lee.

In affirmation of this stance, derivatives trading data from CoinGlass, shows that ETH futures markets have attracted an unusual volume of capital inflows. 

The chart below illustrates how Ethereum open interest rose to 20% to hit $7.8 billion shortly after BlackRock’s application. Notably, the $7.75 billion open interest recorded on Nov.10 was the second highest for the year. 

Ethereum (ETH) Open Interest
Ethereum (ETH) Open Interest | Source: CoinGlass

Open interest quantifies the total capital currently invested in active or outstanding ETH futures contracts. Typically, an increase in open interest is a bullish signal, indicating that more investors are bringing capital into the Ethereum derivatives markets. 

Ryan Lee added that this ETH open interest is likely to remain in an upward trajectory as investors will now look to exploit potential arbitrage opportunities in the $7.75 billion derivatives market. 

“Going forward, ETH derivatives trading volumes will continue to maintain higher levels, accompanied by significant price volatility. This will bring more trading opportunities for market funds, amplifying returns for short-term long and short strategies, as well as funding rate arbitrage.”

Ethereum Traders Paying Record Fees to Hold out for Future Profit Opportunities 

In an apparent affirmation of Ryan Lee’s stance on a potential ETH arbitrage window, on-chain data from Glassnode, shows that ETH traders are paying record fees to keep their bullish positions open. 

Ethereum investors have radically changed their trading patterns in response to recent market-moving events. The chart below shows that the ETH Perpetual Funding Rate rose to a peak of 0.034% on Nov. 10 and 12, respectively. Since then, the minimum value recorded has been 0.008%, which is higher than the monthly peaks for September and October. 

Ethereum (ETH) Perpetual Funding Rates
Ethereum (ETH) Perpetual Funding Rates | Source: Glassnode

Perpetual funding rates, in the context of crypto derivatives trading, represents the difference between the mark price of the perpetual futures market and the index (spot) price. Typically, positive values of funding rates mean that bullish traders are paying short positions and vice versa. 

A significant increase in positive funding rates means most investors are anticipating that prices or market liquidity will rise further and open further profit opportunities. 

This echoes Ryan Lee’s thoughts that the recent increase in Ethereum derivatives market liquidity from institutional participation could open a profitable arbitrage window. 

If Ethereum traders continue to front-run this expectation with massive capital inflows, ETH price could rise further toward $3,000. 

ETH Price Prediction: Is $3,000 Next Target? 

From the data trends analyzed above, Ethereum traders are showing a strong inclination to go long on ETH through futures contracts.

“If arbitrage opportunities become apparent, market participants will consider buying ETH in spot markets and shorting ETH Futures contracts to capitalize on the funding rate. This will result in a secondary increase in the open interest of ETH contracts. Meanwhile, the funding rate on contracts will experience a decline,” said Ryan Lee.

However, to capitalize on this potential $7.75 billion arbitrage window, the bulls must first scale the initial resistance around $2,300. 

The Global In/Out of the Money (GIOM) data, which groups the current ETH holders according to their entry prices, also confirms this prediction.

It shows that 4.2 million holders had bought four million ETH at the average price of $2,280. If those investors exit early, they could trigger an instant Ethereum price correction. 

However, scaling that initial sell wall could trigger a short squeeze and propel ETH price toward $3,000 as predicted. 

Ethereum (ETH) Price Prediction | GIOM data
Ethereum (ETH) Price Prediction | GIOM data | Source: IntoTheBlock

Still, the bears could invalidate that positive prediction if Ethereum’s price dips below $1,800. But, in that case, ETH could find initial support at the $1,900 area. The chart above shows that 7.2 million holders bought 8.5 million ETH at the maximum price of $1,890. If those investors hold HODL firmly, Ethereum’s price will likely avoid a significant price retracement.

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Ibrahim Ajibade
Ibrahim Ajibade Ademolawa is an experienced On-chain research analyst who began his career in Commercial Banking. He has worked with several Web3 startups and financial institutions —analyzing technical concepts and spectacular events that link the DeFi and TradFi worlds. He holds a Bachelors’ Degree in Economics and is currently pursuing an MSc. in Blockchain & Distributed Ledger Technologies.
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