Monthly Outlook: Post-ETF Trading Themes

According to Coinbase, US Bitcoin ETFs account for up to 15% of BTC spot trading.

In a recent report titled “Monthly Outlook: Post-ETF Trading Themes,” Coinbase analysts David Duong and David Han shed light on the current state of spot Bitcoin exchange-traded funds (ETFs) and the emerging trends that deserve our attention. According to them, while the spot Bitcoin ETFs have garnered significant interest, they might be overshadowing other crucial developments in the cryptocurrency space.

The Short-Term Overestimation of Spot Bitcoin ETFs

With spot Bitcoin ETFs making their debut, many believed this to be a milestone moment for the crypto economy. However, the Coinbase analysts assert that the short-term performance impact of the $1.46 billion inflow into spot Bitcoin ETFs in January has been somewhat overestimated. They reveal that in reality, U.S. spot Bitcoin ETFs account for only 10-15% of the total Bitcoin spot trading volume across centralized exchanges (CEXs) globally. These ETFs hold around 650,000 BTC or 3% of the total outstanding Bitcoin supply.

To put this into perspective, let’s take a look at the recent trading volumes. According to data from CoinMarketCap, Bitcoin’s spot trading volume amounted to a staggering $29.5 billion over the past 24 hours. Meanwhile, the 10 spot Bitcoin ETFs traded around $1.3 billion on February 8, which constituted approximately 4.4% of the total Bitcoin traded on CEXs during the same period.

Global CEX volumes versus spot Bitcoin ETF volumes. Source: Coinbase

• Bitcoin’s active supply is increasing as long-term holders begin transferring assets.
• Stacks (STX) and Bitbot Gain Momentum as Bitcoin Surges
• Demystifying the Influx of Bitcoin ETFs

Emerging Crypto Themes Beyond Spot Bitcoin ETFs

While the spotlight has been on spot Bitcoin ETFs, the Coinbase analysts believe that other exciting crypto themes have arisen in their wake. One such theme is the surging decentralized finance (DeFi) activity, which adds immense value to Ethereum (ETH). As 58% of the total DeFi value remains locked on the Ethereum blockchain, the strength of ETH becomes one of the three key trends, along with DeFi growth and the selling pressure faced by Bitcoin miners as the halving approaches.

The looming Bitcoin halving in April raises concerns about the mining economics. It’s believed that the halving might negatively impact mining profitability, leading to increased sell pressure on miners as their margins narrow and less excess profit can be retained in Bitcoin. However, the study points out that the effects of miner selling may not be immediate.

The Rise of DeFi and Ethereum’s Price Surge

In recent years, DeFi activity has experienced fluctuations. After peaking above $200 billion in October 2021, the total value locked (TVL) in DeFi witnessed a decline. However, the DeFi TVL has been picking up in 2024, surging 18% from $55 billion on January 1 to $65 billion at the time of writing, according to DefiLlama.

Meanwhile, the price of Ethereum (ETH) has seen significant growth since the beginning of the year. Rising from $2,350 on January 1 to $2,510 at the time of writing, ETH has added 7% to its value, according to CoinGecko. Notably, Ethereum community member and investor Ryan Berckmans predicts that Ethereum’s transition from proof-of-work to proof-of-stake consensus mechanism could potentially propel its price to as high as $27,000 during the bull cycle.

Q&A: Answering Your Burning Questions

1. Are spot Bitcoin ETFs the future of crypto trading? Spot Bitcoin ETFs have garnered attention, but they still represent a small fraction of the total Bitcoin trading volume. While they provide a convenient investment vehicle for some, the growth and impact of decentralized finance and Ethereum cannot be ignored.

2. What is the significance of DeFi activity? DeFi activity plays a vital role in the overall cryptocurrency ecosystem. It offers new financial opportunities, enhances financial inclusivity, and empowers individuals to take control of their own money. With a substantial portion of DeFi value locked on the Ethereum blockchain, the growth of DeFi adds value to Ethereum as a platform.

3. How will the Bitcoin halving affect miners? The Bitcoin halving event may lead to increased sell pressure on miners as their profitability narrows. This could be a result of reduced block rewards and potentially lower profit margins. However, the effects of miner selling may not be immediate and could take time to manifest.

4. What is the future outlook for Ethereum? Ethereum is poised for growth, especially with the transition to a proof-of-stake consensus mechanism. This shift could potentially drive ETH’s price to new heights, with predictions reaching as high as $27,000 during the bull cycle.

Looking Ahead: Crypto Trends and Opportunities

While spot Bitcoin ETFs have undoubtedly made waves in the crypto space, it’s crucial to keep an eye on emerging trends and opportunities. Decentralized finance and the value proposition of Ethereum present significant areas of growth, alongside the effects of the upcoming Bitcoin halving on miners. These factors, combined with the wider adoption and acceptance of cryptocurrencies, shape the future of the digital asset landscape.

References: – Spot Bitcoin ETF ‘superior’ to gold ETF – Core Scientific founder – DeFi’s billion-dollar secret: The insiders responsible for hacks – Ethereum price reaches support, ETH to start steady increase again – BTC to USD – 5100 next major Ethereum targets, according to the model – Ethereum price prediction: Major gains expected in 2024, ETH to surpass all-time high

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Hey readers, what are your thoughts on the future of spot Bitcoin ETFs? Do you believe they will dominate the market, or do other trends, like the rise of DeFi and Ethereum’s potential price surge, catch your attention?

Let us know in the comments below, and don’t forget to share this article with your fellow crypto enthusiasts! 🚀

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