Can Ethereum (ETH) Price Reach $3,000 after Blackrock ETF Approval?

Price Insights:

• Ethereum (ETH) price smashed the elusive $2,000 resistance last week after Blackrock filed an application for Spot ETH Exchange Traded Fund (ETF).
• Ethereum Funding Rates have skyrocketed to an all-time high of 0.034%, as ETH traders showed a strong inclination to hold LONG positions.
• In the derivatives market, investors have piled additional capital into Ethereum Futures contracts. 

Ethereum price broke past the landmark $2,100 milestone last week after Blackrock filed an application for Spot ETFs. On-chain analysis explores how this could impact ETH price action and trading patterns in the coming weeks.

Ethereum price entered a breakout toward the 4-month peak of $2,150. Recent changes in ETH trading patterns reveal that investors are showing a strong inclination to hold out for future profit opportunities.

Blackrock ETF Approval Could Crack Open a $7.8B Arbitrage Window 

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

BlackRock’s 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 November 9 announcement, the Ethereum price performance overtook Bitcoin, with ETH/BTC exchange rate climbing by 10% within 24 hours. 

In reaction to this, some institutions may redirect funds previously bet on BTC to ETH, seeking potentially greater returns. 

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 $7.75 billion shortly after Blackrock’s application. Notably, the $7.75 billion Open Interest recorded on November 10 was the second highest for the year. 

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. 

ETH Open Interest is likely to remain in an upward trajectory as investors may now look to exploit potential arbitrage opportunities in the $7.75 billion derivatives market. 

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 Bulls are Paying Record Fees to Hold Out for Future Profit Opportunities 

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

The chart below illustrates that Ethereum investors have radically changed their trading patterns, in response to recent market-moving events. On November 10, ETH Perpetual Funding Rate rose to a peak of 0.034% on November 10 and 12 respectively.

And since then the minimum value recorded is 0.008%, which is higher than the monthly peaks for September and October. 

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 means 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 the sentiments 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 Forecast: $3,000 Could be the 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 open up, market participants may consider buying ETH spot and shorting ETH contracts to capitalize on the funding rate. 

However, for the bulls to capitalize on this potential $7.75 billion arbitrage window, they 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 4 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. 

Still, the bears could invalidate that positive prediction if Ethereum price dips below $1,800.

But, in that case, the 7.2 million holders that bought 8.5 million ETH at the maximum price of $1,890 could offer initial support. If those investors HODL firmly, Ethreum price will likely avoid a larger downswing.