4 analysts on crypto's next market moves
More than $1 billion has poured into crypto investment products this year, and professional market watchers are predicting what might happen next. [Jakie Niam via Getty Images]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Wall Street doubled down on ETH and BTC. BlackRock’s new bid for an ether fund sent the cryptocurrency over the $2K mark for the first time since July.
Four major analysts predict what’s next for crypto markets. What JPMorgan, Bloomberg, Morgan Stanley, and Bernstein are saying.
This week in numbers. The six-figure sum an NFT pet rock sold for, MicroStrategy’s unrealized BTC profits, and more stats to know.
INSTO KARMA
Wall Street doubles down on crypto as markets bounce back
After ticking upwards for months, crypto markets shifted into a higher gear in the last few weeks. The total crypto market cap has risen more than 30% in the past month to $1.4 trillion, inflation has continued to cool, and investor sentiment has become more positive by the week.
And with encouraging signs that crypto winter may be thawing out (DeFi is surging! Disney is getting into Star Wars NFTs!), institutional investors on Wall Street and beyond are taking on an increasingly important role in the expansion and adoption of crypto.
Here’s what you need to know.
BlackRock followed its spot BTC ETF application by filing for an ETH fund.
After the world’s largest asset manager (which is awaiting SEC approval for a spot BTC ETF) filed to register a new entity called the iShare Ethereum Trust last Thursday, ETH spiked more than 10% — bringing the token above $2,000 for the first time since July.
The trust filing is seen as the first step toward a formal application for a spot ETH ETF, which would buy ether and sell shares via conventional brokerages. (If BlackRock does formally apply for the ETF, it could still be months before the SEC addresses the application.)
A slate of new BTC and ETH futures products are launching in the U.S.
The crypto arm of the Chicago Board Options Exchange (CBOE), said it will officially list margin BTC and ETH products on Jan. 11, making it the first regulated U.S. exchange and clearinghouse to enable both spot and leveraged derivatives trading on a single platform.
Margin products allow investors to invest using borrowed capital and take positions that exceed their collateral. Futures are bundles of contracts to buy an asset at a future date for a specific price. (Learn more about crypto futures.)
Meanwhile, five new funds that will invest in BTC and ETH futures are launching from Ark Invest and 21Shares next week. While the first BTC futures ETF had a blockbuster debut during the last bull cycle, the reception to recently launched ETH futures funds has been muted.
The bottom line…
Crypto investment product inflows, which are seen as a proxy for institutional interest in the industry, have reached $1.14 billion so far this year — with a 99% increase in assets under management since the start of the year.
Asset managers put nearly $300 million into such products last week alone. In one telling statistic, products that speculate on bitcoin’s price going lower saw $7 million of outflows last week, an indicator that investors are bullish about BTC’s future.
SOUND BYTES
Where 4 key analysts think crypto markets are headed
With optimism around spot BTC ETF approval growing by the week, ETH getting a boost from some ETF hype of its own, and crypto markets from DeFi to NFTs heating up, what’s likely to happen next? This week, we’ve rounded up takes from four major analysts to see what professional market watchers are predicting.
Bloomberg Intelligence: 90% chance of near-term spot BTC ETF approval.
Bloomberg Intelligence analysts suggested that Wall Street’s many spot BTC ETF applications could begin getting greenlit by the SEC as early as this week, during an approval window that’s open until Nov. 17. “Even if approvals don't arrive this month,” they added, “we still believe there's a 90% chance of approval by Jan. 10.”
Bernstein: BTC could climb as high as $150,000 by 2025.
Bernstein analysts predict that new flows of institutional capital enabled by the proposed spot ETFs will combine with BTC’s forthcoming halving to trigger the next bull cycle: “We believe early flows could be slower and the build up could be more gradual, and post-halving is when ETF flows momentum could build, leading to a cycle peak in 2025 and not 2024.”
The halving is a mechanism built into BTC’s code intended to make it a rare, inflation-resistant asset. About every four years — or more exactly, after every 210,000 blocks — the amount of new bitcoin generated is reduced by half until all 21 million bitcoins have been mined sometime around 2140. Read last week’s Bytes to learn more.
Morgan Stanley: “Crypto winter may be in the past.”
“Historically, most of bitcoin’s gains come directly after a ‘halving’ event that occurs every four years,” noted a recent post on the Morgan Stanley Wealth Management website. “Based on current data, signs indicate that crypto winter may be in the past and that crypto spring is likely on the horizon.”
JPMorgan: “Crypto rally looks overdone.”
Unlike their colleagues at other firms, the authors of a new JPMorgan report are skeptical about spot ETFs driving a major net increase in crypto investment. "[I]nstead of fresh capital entering the crypto industry to be invested in the newly-approved ETFs,” JPMorgan’s report said, “we see as a more likely scenario existing capital shifting from existing bitcoin products such as the Grayscale bitcoin trust, bitcoin futures ETFs, and publicly listed bitcoin mining companies, into the newly-approved spot bitcoin ETFs.”
The bottom line…
Despite the occasional skeptic, a broad consensus has emerged around the potential impact of spot ETF approvals. As Coinbase Institutional’s research team put it in their latest Monthly Outlook report, spot crypto ETFs could “open up a massive opportunity for the wealth management community, which handles over a third of all wealth in the U.S.”
How big of an opportunity? “In the long run, spot ETFs could add billions of dollars to the total crypto market cap, although we believe this will take time.”
NUMBERS TO KNOW
$1.1 billion
Dollar value, as of Friday, of MicroStrategy’s unrealized gains on the 158,000 BTC it holds. The software intelligence firm — founded by major BTC booster Michael Saylor — is by far the largest corporate holder of bitcoin.
$209,000
Price that an NFT pet rock sold for on Friday, as major NFT collectibles have spiked in recent weeks. Per the EtherRock website, the NFTs (which became massively popular during the 2021 boom) “serve NO PURPOSE beyond being able to be bought and sold, and giving you a strong sense of pride in being an owner.”
120,000
Number of comments the IRS received in response to a widely criticized new digital-assets tax proposal, which Coinbase’s VP of Tax Lawrence Zlatkin described as an “unduly burdensome set of new reporting requirements.” Per CoinDesk, after Monday’s public hearing and comment deadline, the IRS will have to comb through a “mountain” of messages.
TOKEN TRIVIA
When is the next Bitcoin “halving” expected?
A
December 2023
B
January 2024
C
April 2024
D
June 2024
Find the answer below.
Trivia Answer
C
April 2024
