The crypto rally has stalled, and bears say spot Ethereum exchange-traded funds won’t be the boon investors hope for.

However, Bernstein analysts argue that there are reasons to be bullish.

“The new crypto bull cycle is a multi-year opportunity, and the near term weakness may be another opportunity to find attractive entry levels,” Bernstein analysts Gautam Chhugani and Mahika Sapra wrote in an investor note this week.

They argued that growing crypto adoption, Donald Trump’s pro-crypto stance, and the powerful industry lobby scoring new wins signal that a rally is coming.

While they didn’t say when, they’ve previously predicted that Bitcoin will reach $200,000 over the next year.

The report came as Bitcoin and Ethereum have fallen 16% and 17% respectively since March.

Ethereum ETF

The launch of spot Ethereum ETFs could change that.

The US Securities and Exchange Commission is expected to greenlight seven Ethereum ETFs as early as next week.

Investment firm QCP Capital says the event could trigger a 60% rally of the second biggest cryptocurrency.

Yet, not everyone is equally ecstatic. The bears

The “expectations of crypto natives are overinflated and disconnected from the true preferences of TradFi allocators,” Andrew Kang, managing partner at investment firm Mechanism Capital, wrote on X.

Ethereum “has much less buy-in as a key portfolio allocation for many large groups of non crypto native capital.”

Bernstein agreed that several obstacles may hold back Ethereum despite the ETFs.

Duncan Trenholme, co-head of digital assets at TP Icap, the world’s largest broker dealer, recently told DL News he has struggled to sell Ethereum to clients, in part because Ethereum lacks the digital gold narrative that Bitcoin has.

Reasons for bullishness

And Bernstein conceded that while inflows and a flood of liquidity seen after the launch of Bitcoin ETFs will happen on a smaller scale for Ethereum ETFs compared to Bitcoin ones, bullishness should prevail in the long run.

Chhugani and Sapra argued that Ethereum is becoming a primary platform for the tokenisation of traditional assets, which is something financial powerhouses like BlackRock are interested in.

Trump’s endorsement of crypto suggests that a Republican win in the presidential election would pave the way for friendlier policies.

In other words, Bernstein said the drivers of the rally still remain.

“The asset managers pursuing crypto remain committed to growing this business aggressively.”

Eric Johansson is DL News’ News Editor. Got a tip? Email him at eric@dlnews.com.