Retail indicators point to dormant demand for ETH and cryptocurrencies
For starters, the Google searches for “Buy Ethereum”, “Buy ETH” and “Buy Bitcoin” have been stagnant for the past week.
One might argue that retail traders typically lag the bull runs, usually entering the cycle a couple of days or weeks after major price marks and 6-month high have been hit. However, there has been a declining demand for cryptocurrencies, when using stablecoins premium as a gauge for Chinese crypto retail trader activity.
The stablecoin premium measures the difference between China-based peer-to-peer USD Tether (USDT) trades and the United States dollar. Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether’s market offer is flooded, causing a 2% or higher discount.
Currently, the Tether premium on OKX stands at 100.9%, indicating a balanced demand from retail investors. Such a level contrasts with the 102% from Oct. 13, for instance, before the crypto total market capitalization jumped 30.6% until Nov. 9. That goes on to show that Chinese investors are yet to present an excessive demand for fiat-to-crypto conversion using stablecoins.
In essence, Ether’s rally above $2,000 seems to have been driven by derivatives markets and the expectation of a spot ETF approval. The lack of retail demand is not necessarily an indicator of impending correction. However, the hype around BlackRock’s Ethereum Trust registry, coupled with excessive leverage longs in ETH derivatives, raises concerns, putting the $2,000 support level to the test.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.