Ether rises above $3,000

This week, alongside bitcoin, ether also captured attention. After months of battling with significant price zones for ether, it seems that the upward trend has finally begun. What lies ahead for ether? That, and more, is discussed in this Weekly!

This Weekly in brief:

• Market: Bitcoin's price surged to $53,000 this week, marking a new high in this market cycle. Ether also performed well, with its price crossing $3,000 for the first time since April 2022.
• News: The spot bitcoin ETFs have been performing above expectations for over two weeks. Concerns about a new sell-off from Grayscale (GBTC) appear to be exaggerated.
• Behind the Scenes: We are pleased to share our House View for 2024: a report from the Amdax Wealth Management team outlining our vision and expectations for the upcoming crypto year.

Market update

Last Wednesday, we described how bitcoin's price had risen above $50,000 after a 21% correction. This week, it went even further. With two spikes reaching $53,000, we comfortably exceeded the previous peak from January 11.

This confirms the long-term upward trend. Characteristic of this trend is a series of higher highs (HH) and higher lows (HL). We are now above the previous peak of $49,000. If the price were to start a new correction now, reaching $53,000 again would establish a new higher peak. And if we also stay above $38,500, we would see a higher low.

The driving force still seems to be the enthusiasm surrounding the American spot bitcoin ETFs. Last week, they collectively bought around 45,000 bitcoins, bringing in over $2 billion in new capital.

We have little data for this week so far, as the American markets were closed on Monday. The initial figures from Tuesday, February 20, with an expected inflow of $136 million, don't seem as strong as the previous two weeks. This draws attention to the lack of insight into who the buyers of these ETFs are. Are they long-term investors, or traders who will sell as quickly as they bought in the past few weeks if the price drops?

How the balance between buyers and sellers of the ETFs plays out will only be certain during the next correction. Until then, we must rely on the numbers we have, and they still look good. Not only for bitcoin, incidentally. A portion of altcoins is also showing signs of life again, with ether leading the charge this time.

For the past year and a half, the number two cryptocurrency has been trailing behind the number one. While bitcoin is only 23% below its all-time high at $53,000, ether, at $3,000, still has a 38% retracement to make up for.

After months of battling the crucial zone around $2,150, it seems that ether has finally embarked on the upward path. The coming months hold a few positive developments for Ethereum. On March 13th, the Dencun upgrade is scheduled, making the second layer on Ethereum much cheaper. And in May, we expect clarity on a potential spot ether ETF. Whether the tides have turned and ether will outpace bitcoin in the coming period remains to be seen. But the outlook is not bad at all!

News overview

American bitcoin funds have been reporting positive gains for seventeen consecutive days. The past trading week closed on Friday with an inflow of $331 million into the funds. More than half of this amount went to BlackRock (IBIT), which leads the group of new ETFs with a total inflow of $5.36 billion.

The only blemish on this extraordinary track record is the outflow from the Grayscale fund (GBTC) – totaling $7 billion so far. On Wednesday, sister company Genesis received permission from the bankruptcy court to add to this with the sale of the GBTC shares it holds. The bankrupt lending company aims to secure the assets of creditors through this sale.

The news caused some unease among speculators, who vividly remember the repercussions of the earlier sell-off of GBTC shares. Analysts attempt to alleviate this unease by pointing to the high demand for ETFs. "The resilience bitcoin has shown in recent weeks demonstrates the high level of demand in the market," says Miguel Morel, CEO of Arkham Intelligence.

However, experts fail to address the unease with a stronger argument. They do not mention that many of Genesis' creditors prefer to see their assets returned in the form they lent them to Genesis. Genesis explicitly refers to this in the request to liquidate the shares it holds.

This dynamic significantly reduces the chance that the planned outflow from GBTC will strongly impact the bitcoin price!

Other news:

• Major bank Citi utilizes Avalanche to transform traditional assets into tokens. The bank conducted an experiment involving Wellington, WisdomTree, and ABN AMRO, confirming the assumption that working with new infrastructure brings significant efficiency improvements. "Avalanche has proven to be a good environment for exploring the potential of blockchain technology in our industry," says Wellington director Mark Garabedian.
• Even for nation-states, launching an attack on bitcoin or ethereum has become too expensive. Coin Metrics researchers describe this in a recently published paper. To gain control of the bitcoin network for an hour, an attacker would have to pay up to $22 billion. This makes it practically impossible to consistently annex the network. "Ultimately, the network survives," write the researchers.
• Will MicroStrategy's bitcoin strategy soon be driven by the S&P 500? The idea is that the company's stock would significantly increase in value if included in the index. This would provide Michael Saylor with the opportunity to dilute and replenish his bitcoin reserve with the proceeds. Rinse and repeat. The world's largest stock index requires a company's market value to be at least $15.8 billion. Michael Saylor's company still has about $4 billion to go. However, inclusion in the index is not guaranteed.