Zayden is currently at start-up incubator, WhatNot Studios in Bangkok, Thailand. Originally from Singapore, his inquisitive nature brought him overseas to gain experience and learn new things.
It is that same nature that got him into DeFi and Web3, often spending hours a day reading up on it. Self-proclaimed Web3 enthusiast, and investor in cryptocurrency.
Guest Author: Zayden Qu
The past week has been crazy to say the least. Having broken its 52-week high price 2 weeks ago, it consolidated calmly around the $51,000 region before exploding to nearly $64,000. Bitcoin has since risen ~19% the past week and ~41% the past month when we started this weekly insights!
If Bitcoin is the king of cryptocurrency, then, Ethereum has to be the queen, and the queen isn’t doing too bad either. Ethereum has risen ~16% the past week and ~50% the past month. Ethereum outperformed Bitcoin the past month and it is of my opinion that it would probably continue to outperform Bitcoin in the coming months.
So… why is it worth investing into Ethereum at the moment? There are two major catalyst that I am looking at that will likely see ethereum perform extremely well in the coming months.
Ethereum Hype Train
1. Dencun upgrade
The Dencun upgrade is the first major change to Ethereum since April last year. It is designed to reduce cost for its layer-2 transactions and data availability. It is targeted for release on 13th March after a successful launch on the testnet.
My Take: Crypto has always historically been heavily influenced by hype and narratives. For example, many AI tokens such as $TAO have increased dramatically together with the rise of Nvidia. This time is unlikely to be different, the Dencun upgrade coupled with the impending Ethereum ETF sets a perfect narrative to ride with for Ethereum.
2. Ethereum ETF
The Ethereum ETF approval deadline is set on 23rd May. This time around, many will be positive about the result given the Bitcoin ETF approval.
We have seen how the news of the Bitcoin ETF has affected the price. It is a good chance this will repeat for Ethereum ETF. However there are some differences:
- Bitcoin is largely regarded as a digital asset class whereas Ethereum is a blockchain platform that enables the creation of smart contracts and DApps.
- Ethereum’s PoS vs Bitcoin’s PoW consensus mechanisms. It is unsure how SEC will approach the staking mechanism and whether ETF issuers will be able to stake their Ethereum.
My Take: From now till the Ethereum ETF approval/denial date, the price will likely continue to see an increase. Bitcoin’s price rose ~70% in the two months before the approval of the Bitcoin ETF.
Bitcoin – Institutional FOMO?
1. Bitcoin ETF Flows
(Credits to HODL15Capital on X: https://twitter.com/HODL15Capital)
The Bitcoin ETF flows this week have been record breaking, literally. It recorded the largest daily net inflow of $677 million, and this was accounting for GBTC with $216 million outflows. BlackRock’s $IBIT also surpassed Vanguard’s S&P 500 ETF ($VOO) in trading volume.
My Take: I believe the inflows are likely going to be consistent at this positive level. This is because BlackRock’s $IBIT, is currently trading at all time highs. This not only generates a lot of hype and traction behind Bitcoin as an asset class, it also makes it significantly easier for the asset managers in BlackRock to recommend to their clients.
2. JP Morgan Chase Banks’ Irony
JP Morgan’s CEO, Jamie Dimon, has had a long standing hatred for Bitcoin since 2017, calling it “Fraud”, “Pet Rock” and saying “If I was the government, I’d close it down”. So we can probably assume that the largest bank in the US is fervently against anything Bitcoin right?
Well, looking at some facts:
- JP Morgan’s Crypto team grew 200% in December 2023 amid the pending ETF approval.
- JP Morgan is an authorized participant in the Bitcoin ETFs.
Simply put, they are actively participating and profiting from Bitcoin… Seems ironic..
My Take: This is a good example of institutional FOMO, despite the CEO absolutely hating Bitcoin. JP Morgan Chase Bank is still “forced” to participate due to the allure of profits. It seems like the opinion of leaders in wall street doesn’t really matter, as long as there is value and profits in delving into Crypto, the institutions will FOMO in.
Genesis Update
In another hugely positive news, the fear of Genesis dumping on GBTC shares is being alleviated. Gemini has announced on twitter that the creditors will be paid back in-kind, meaning if they will be repaid back in Bitcoin 1:1.
Link: https://twitter.com/GeminiTrustCo/status/1762954631150207226
My Take: The net flow from this whole Genesis situation will probably be close to 0. The creditors that are paid back in Bitcoin can choose whether they want to sell or not. But at the end of the day we are not likely to see the kind of sell pressure from before.
How money historically flows in Crypto
This is a popular flowchart among the Crypto community, it usually dictates how the money flows in Crypto. Historically, Bitcoin will be the most profitable, followed by Ethereum and the rest of the coins. This is because as Bitcoin’s price increases, investors use the profits to invest in smaller coins that have a larger risk & reward.
My Take: I believe Cryptocurrency will continue to see something similar flow in money. Although the Bitcoin ETF changes things, the money from the Bitcoin ETF will no longer flow downwards.
References
https://blockchainmagazine.net/ethereum-etf-different-from-bitcoin-etfs/
https://twitter.com/HODL15Capital/status/1763064066140951012
https://twitter.com/GeminiTrustCo/status/1762954631150207226
