Nasdaq has asked U.S. regulators to allow options trading on BlackRock’s iShares Ethereum Trust (ETHA). The SEC still has to approve options trading on spot Bitcoin ETFs. Despite a recent drop in Ethereum's price, ETH has rebounded and investors continue to show strong demand for ETH ETFs, with close to $49 million in net inflows reported on Aug. 5. Justin Sun, founder of TRON, also boosted market sentiment for the altcoin after buying large amounts of Ethereum. For now, the outlook for ETH is cautiously optimistic, and there are signs that ETH could soon reach $3K again.
Nasdaq Pushes for ETH ETF Options Trading
Nasdaq’s options exchange has asked permission from U.S. regulators to allow options trading on spot Ethereum exchange-traded funds (ETFs), according to a regulatory filing on Aug. 6. The proposed rule change would exclusively apply to BlackRock’s iShares Ethereum Trust (ETHA), which is currently the only Ethereum ETF listed on Nasdaq’s electronic exchange. Other Ethereum ETFs are listed on the New York Stock Exchange’s (NYSE) Arca or Cboe.
This filing represents a big step towards the broader acceptance of ETH ETFs, which were listed in July and have since garnered about $1.5 billion in net inflows, according to Morningstar.
The U.S. Securities and Exchange Commission (SEC) has not yet authorized options trading on spot Bitcoin ETFs, which were listed in January and now hold roughly $50 billion in Bitcoin assets. In July, the SEC informed the six options exchanges, including Nasdaq ISE, that requested to list options on spot Bitcoin ETFs that more time was needed for a decision.
Options are a common tool for hedge funds and financial planners to mitigate the impact of large market movements, like the 20+% drop in Ethereum’s price on Aug. 5. Financial advisers manage almost half of the investment flows in the $9 trillion ETF market, with more than 10% actively using options to manage client portfolios, according to a survey by The Journal of Financial Planning.
Morgan Stanley, which is the largest financial advisory firm with $3.75 trillion in assets, is reportedly preparing to allow its 15,000 advisers to start recommending Bitcoin ETFs as early as this week. On Aug. 5, Europe’s fourth largest hedge fund also shared that it made a nearly $500 million investment in Bitcoin ETFs, following the lead of firms like Millenium Management, which invested close to $2 billion in Bitcoin funds earlier this year.
Can ETH Hit $3,000 Again?
On Aug.2, Ethereum's price experienced a big 30+% decline from $3,203 to $2,188 on Aug. 5. As a result, the altcoin hit its lowest level in over seven months. This happened in the middle of a broader market correction in the crypto sector. However, ETH was able to rebound from its Aug. 5 low within 36 hours. Now, traders wonder if ETH can reclaim the $3,000 mark.
ETH 1D chart (Source: TradingView)
With regards to how sustainable ETH’s rebound actually is, it could help to look at what caused the altcoin’s initial drop in the first place. Analysts suggest that the Japanese stock market may have triggered the sell-off after the Nikkei 225 suffered intraday losses of 13% on Aug. 5. This happened after the Bank of Japan's decision to raise interest rates for the first time in 17 years on July 31.
Despite the Nikkei 225 closing only 4.6% down on Aug. 5, the impact was still felt across global markets. The S&P 500 dropped 3%, and gold fell 2.7% from its Aug. 5 high to $2,477. ETH's decline was much more pronounced because of its higher volatility in the cryptocurrency sector and the excessive leverage used by ETH bulls. This also explains how Ether managed to reclaim the $2,500 level on Aug. 6.
Considering the S&P 500's gain from its Aug. 5 lows, there may now be enough bullish momentum to sustain ETH's recovery to the previous week's $3,000 level. However, there is still some macroeconomic uncertainty after major tech companies, including Microsoft and Intel, reported second-quarter earnings below market estimates. Additionally, the entire artificial intelligence sector is under scrutiny, with Nvidia's stock trading 25% below its all-time high. Recent weak U.S. jobs data has also dampened investor sentiment.
Ethereum 3-month futures annualized premium (Source: Laevitas)
ETH’s futures and options metrics can help determine if Ethereum traders should be optimistic after the turmoil. Ethereum monthly futures should trade 5%–10% higher in annualized terms compared to regular spot markets. Ether's futures premium briefly dipped below the 5% neutral threshold on Aug. 5 but managed to stay above 6% later that day. Although this is still below the 11% level seen one week before, the data still suggests a balanced leverage demand between Ethereum bulls and bears using futures contracts.
Cross-checking derivatives data with on-chain metrics shows that the demand for Ethereum decentralized applications was not impacted that much by the price crash. The total value locked (TVL), which measures deposits across the entire ecosystem, including staking, decentralized finance, marketplaces, and collectibles, increased to 19.2 million ETH on Aug. 5, its highest level since November of 2022, according to DefiLlama data.
Overall, there is no major obstacle to Ether's price recovery apart from broader economic uncertainties. If the S&P 500 continues to show strength, it is likely that ETH can reclaim the $3,000 support from the previous week.
Ethereum ETFs See Inflows Despite Price Fall
U.S.-listed spot Ethereum ETFs saw net inflows of almost $49 million on Monday, despite the huge drop in the altcoin’s price. 20%. This indicates that there is still strong demand for the second-largest token by market cap.
Professional investors took advantage of ETH’s dip. Data from SoSoValue shows ETH ETFs saw a trading volume of over $715 million on Aug.5. BlackRock’s ETHA led the inflows with $47 million, while Fidelity’s FETH and VanEck’s ETHV recorded $16 million each. Grayscale’s ETHE was the only product with outflows at $46 million, whereas its smaller Ethereum Mini Trust saw inflows of $7 million.
ETF flows help identify market trends and show where investors are allocating their funds. The fact that investors are still putting money into ETH ETFs could also be a good sign for ETH.
Justin Sun Buys More Ethereum
Quite a few heads also recently turned after TRON founder Justin Sun made a big ETH purchase despite the broader crypto market's struggle to recover from its recent crash. According to Spot On Chain, Sun withdrew about 14,884 ETH from the crypto exchange Binance, which is valued at close to $35.97 million. This move is also seen as a strong show of support for Ethereum, and could potentially boost market sentiment.
This is not Sun's first major Ethereum acquisition. Since February, he has bought a total of 392,474 ETH across multiple transactions. The estimated cost of these purchases is $1.19 billion, though their current value is around $995 million after the recent price drop.
Sun's ongoing accumulation of Ethereum is important considering his influential status in the crypto industry. His ETH buying could even encourage a broader accumulation trend for ETH. Spot On Chain also reported that Sun deposited a net amount of 49 million USDT to the HTX exchange over the past three days. This could suggest that Sun is gearing up to buy even more ETH.
Despite recent market speculation that Sun triggered an Ethereum sell-off and faced liquidation, he has refuted these claims. Sun stated that he does not engage in leverage trading as he believes these strategies are detrimental to the crypto industry.
