Ether (ETH) broke past the month-long consolidation phase to register a new ATH of $2,152 a couple of days ago. The new ATH comes in the wake of declining Bitcoin dominance which is currently at 55.53% and ETH/BTC pair bottoming at 0.03. However, the new ATH came amid declining implied volatility this year which might indicate that the retail demand is overpowering the lower interest of institutions.
Implied volatility is a critical tool to measure market sentiment where it measures the market demand for an underlying asset. The declining implied volatility implies a lower interest of traders in the Options, thus the premium on the option declines, and vice versa.
In case of Ether, declining implied volatility means less demand for Ether Options thus a lower premium on the contracts.
ETH spot is rising while implied vol is down which may suggest retail demand is way higher than institutional at present.
Alt-Season Knocking on the Doors
This bull season has seen Bitcoin more than triple its 2017 ATH while maintaining more than 60% market dominance throughout. However, the dominance has declined sharply this month falling up to 55% thus raising hopes for an alt season quite similar to 2017. ETH has already recorded a new ATH while many other altcoins also recorded their new ATH.
The crypto market cap has crossed the $2 trillion mark for the first time doubling in just three months. ETH soaring retail demand could lead the alt season in 2021 again with its market supply constantly declining as more ETH is being staked in the ETH 2.0 staking protocol with the total amount of ETH staked reaching over 3.5 million.