Ben Laidler, global markets strategist at the investment and trading platform eToro, on the cryptoasset market. “Bitcoin has set the pace and optimism is high, with the classic supply and demand contraction due to ETF inflows and the imminent halving,” he explains. For its part, Ethereum has lagged, although he points out that the decision on the spot ETF “is a possible opportunity.” Likewise, it indicates that cryptoassets also have long-term catalysts such as “Federal Reserve rate cuts and changes in corporate accounting and banking regulation.”
Cryptoasset messages
ASSET: Cryptoassets are by far the best performing asset class this year, outperforming other tangible assets such as gold. Its $2.7 trillion market capitalization is the smallest, youngest and most retail of any asset. Bitcoin has set the pace and optimism is high, with the classic supply and demand crunch for ETF inflows and the impending halving. However, Ethereum has lagged and its depressed sentiment ahead of next month's decision on the spot ETF is a possible opportunity. Cryptoassets also have longer-term catalysts, such as Federal Reserve rate cuts and changes to corporate accounting and banking regulation, while venture capital inflows into the ecosystem increased by a third last quarter and are developing institutional tokenization projects.
ETHEREUM: ETH has lagged behind Bitcoin and is 25% below its all-time high. Its “dominance,” or share of the cryptoasset market capitalization, is just 16%, even after the Dencun upgrade in April, which reduced transaction fees and boosted scalability, and with more uses of tokenization, such as BlackRock's digital liquidity fund. There's also the US SEC's first May 23 deadline to decide on a spot Ethereum ETF, with a three-week public comment period now open. Skepticism around approval is the main driver of poor performance. The Ethereum Trust NAV discount has also been widened to 26%, as ETH could be considered a security with a different legal basis than Bitcoin.
BITCOIN: The largest crypto asset has found support after taking profits from its recent new all-time high. It is being driven by a classic supply and demand squeeze, as new spot ETFs see an average of $200 million in daily net inflows, and now hold 4% of all BTC. Meanwhile, adoption is spreading to more fund platforms and new products are being launched, such as leveraged versions. Furthermore, there are only two weeks left until the quadrennial halving event occurs, which will cut the 7% growth rate of Bitcoin that remains to be mined. The MicroStrategy equity fund's 2x NAV premium reflects optimism, even as competition from higher bond yields and delayed Federal Reserve rate cuts has increased.
This content is for informational and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. CFDs are leveraged products and carry a high risk to your capital
Investing in crypto assets is not regulated in some EU countries or the United Kingdom. There is no consumer protection. Your capital is subject to risk.
