Over the past week, Ethereum, the second-largest cryptocurrency, emerged as the top performer in an otherwise subdued crypto market. During this period, Bitcoin experienced a decrease in net inflow into exchange-traded products, including Bitcoin spot ETFs, compared to the previous week. On Friday, the Uniswap Foundation suggested a new fee mechanism, potentially enhancing its token significantly.
We are incredibly optimistic about the Ethereum Layer 2 space. We are backing this conviction up with a selection of rollup tokens in our portfolio. It appears the wider market has not yet caught on to the fact that rollups could soon render almost all other Layer 1 cryptocurrencies redundant, largely thanks to leveraging Ethereum’s unmatched network effect. These tokens also stand out as some of the rare cryptocurrencies that could genuinely become yield-generating in the not-so-distant future.
We have a high level of confidence that the US will witness the launch of an Ethereum spot ETF within this year, assigning a 90% probability to this event. Our optimism is grounded in five key reasons. We have every reason to believe that an Ethereum spot ETF will be just as successful as the Bitcoin spot ETFs have already been.
It seems that a significant portion of the crypto market turned bearish following Jerome Powell’s speech yesterday. However, we remain bullish. We believe the speech did not bring about significant changes; liquidity is still expected to increase, Bitcoin is experiencing substantial ETF inflows, and the crypto market is on the verge of embracing three powerful narratives.
Everyone is looking forward to the Bitcoin halving, yet there is little focus on Ethereum’s equivalent of a triple halving. In our crypto portfolio, Ethereum takes the spotlight. We predict that Ethereum will evolve into a widely-utilized digital commodity, coupled with a decreasing supply and the ability to generate dividends – a truly unique asset, not just in crypto, but beyond.
While the approval of the Bitcoin spot ETF did not spark a significant reaction in the market for Bitcoin, Ethereum emerged as the clear winner, securing a substantial 15% gain over Bitcoin post-ETF approval. Our expectation is that Ethereum stands to reap further rewards in the coming months, while Bitcoin experiences slow bleeding.
As we step into 2024, it seems like everyone is long crypto left, right, and center. This environment does not elicit much enthusiasm from us, as it brings back memories of the exact opposite situation just a year ago. We have identified five key factors that we believe will shape 2024. Among them, three are anticipated to pose potential downsides, one holds the potential for an upside surprise, and there is a joker that seems to be completely overlooked.
The crypto industry can breathe a sigh of relief as institutions enter the crypto space, even as the industry continues to lick its wounds after last year’s contagion. The industry does not appreciate the European Union’s MiCA framework enough, if at all. Few seem to know what it is, yet it will be vital in shaping tomorrow’s crypto industry.
A bet on crypto right now is a bet on macroeconomics. For believers in a soft landing and imminent interest rate cuts, accumulating crypto could be advantageous. In this scenario, we believe Ethereum to outperform Bitcoin massively. Alternatively, those anticipating a hard landing may find it wise to stay on the sidelines for now. Delve deeper into our analysis for a comprehensive understanding of our view.