Coinbase analysts David Duong and David Han suggest that while spot Bitcoin ETFs have garnered attention, focusing solely on them might distract from more significant crypto trends unfolding post-ETF implementation.
Despite a notable $1.46 billion inflow into spot Bitcoin ETFs in January, Coinbase analysts caution against overestimating their short-term performance impact. They highlight that U.S. spot Bitcoin ETFs represent only 10-15% of total Bitcoin spot trading volume on centralized exchanges (CEXs) globally, holding approximately 650,000 BTC or 3% of the outstanding Bitcoin supply.
The analysts argue that more substantial crypto themes are emerging post-ETF launches, such as the increasing activity in decentralized finance (DeFi). They suggest that DeFi growth could significantly enhance the value proposition for Ethereum (ETH), considering that 58% of the total DeFi value is locked on the Ethereum blockchain.
Duong and Han identify three key themes in the industry: DeFi growth, ETH strength, and selling pressure on Bitcoin miners leading up to the halving in April. They anticipate that the Bitcoin halving could negatively impact mining economics, potentially increasing sell pressure on miners as profit margins narrow.
While DeFi activity experienced a decline after peaking in October 2021, it has shown signs of resurgence in 2024, with the total value locked (TVL) increasing by 18% from January 1 to the time of writing. Additionally, the price of ETH has seen significant growth year-to-date, rising from $2,350 to $2,510, according to CoinGecko.
Ryan Berckmans, an Ethereum community member and investor, believes that Ethereum’s transition from proof-of-work to proof-of-stake consensus mechanism could drive ETH’s price as high as $27,000 during the bull cycle, highlighting the optimism surrounding Ethereum’s future trajectory.
In summary, while spot Bitcoin ETFs have sparked interest, the Coinbase analysts advocate for a broader perspective, emphasizing the significance of emerging trends such as DeFi growth and Ethereum’s resilience and potential for further appreciation.
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