Casey Wagner

<div id="highlights-block_61f2daa76094d" class="highlights">
 <ul>
 <li>As investors embrace a risk-off approach, bitcoin is trading more in sync with equities </li>
 <li>The correlation will fade and bitcoin will rise, though, analysts say </li>
 </ul>
 
</div>



Amid growing concerns about inflation and looming rate hikes from the Federal Reserve, bitcoin has been moving more in sync with stocks than ever before.&nbsp;



An imminent end to the Fed’s ultra-easy monetary policy days has investors reconsidering their appetite for risk.&nbsp;



“The same players who pursued significant risk-on sentiment are now moving towards a risk-off approach as the Fed gears up to change course on interest rates,” said Josh Olszewicz, head of research at Valkyrie Funds.&nbsp;



Though bitcoin is trading more in tandem with the tech-heavy Nasdaq, traders expect the association to weaken over time. 



“Markets tend to increasingly correlate on the down side, and eventually this trend may decouple, just as it has in years prior,” said Olszawicz.&nbsp;



The correlation coefficient between bitcoin and the Nasdaq broke 0.60 earlier this month, the highest level in more than a year, according to a <a href="https://blog.kaiko.com/bitcoins-correlation-with-equities-surges-d55456a3e37" target="_blank" rel="noreferrer noopener">report</a> from crypto data firm Kaiko. The digital currency is also trading more closely to the S&amp;P 500. A coefficient of 1 means the assets are moving in tandem, while a -1 signals the opposite.&nbsp;



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="546" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png" alt="Bitcoin, once touted for its uncorrelated nature, is starting to trade more like stocks" class="wp-image-16149" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/01/bitcoin_Img0-1-1024x546.png?w=1376 1376w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure></div>



Bitcoin has dropped more than 20% on the year. The Nasdaq has lost close to 14% over the same period. Cathie Wood’s ARK Innovation ETF (ticker ARKK), which has top holdings in Spotify, Tesla and Zoom, is down more than 30% year-to-date/



“Bitcoin should remain as a sound money alternative while some players in the tech sector are likely to be better priced according to their fundamentals,” Olszawicz said.&nbsp;



Once the current sell-off rebounds, bitcoin should start to trade in a less-correlated way, analysts project.&nbsp;



“The ‘don&#8217;t fight the Fed’ mantra pertains to all risk assets, notably equities,” said Mike McGlone, senior commodity strategist at Bloomberg Intelligence. “Cryptos are among the riskiest most speculative assets, but bitcoin is the least risky crypto.”&nbsp;



Bitcoin’s increasing adoption will help, too, McGlone added.&nbsp;



“I expect bitcoin to come out ahead in this market risk-off period as the benchmark crypto transitions to global digital collateral, which is a minor fraction of most portfolios,” McGlone said. “That&#8217;s changing, and 2022 may mark a key transition period.”


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<hr class="wp-block-separator has-alpha-channel-opacity"/>



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Risk-On Appetite Falters: Bitcoin Trades Like Big Tech

Sam Martin

<div id="highlights-block_61702cf37cdec" class="highlights">
 <ul>
 <li>Newly launched BTC ETF, BITO, helps fuel a bitcoin rally past all time highs on favorable signs from regulators in the US.</li>
 <li>Despite trading at similar prices as April of 2021, there is less leverage in the market and on-chain data supporting the rally has more room to run.</li>
 </ul>
 
</div>



Bitcoin has surpassed its previous all-time high of $64,895, last seen on April 14, 2021.



Back then, bears rejoiced as they declared BTC dead (again) over the course of a 55% drawdown through the latter half of July.



Many market participants are attributing the bullish price action to the highly anticipated futures-backed BTC ETF, <a href="https://www.cnbc.com/quotes/BITO">BITO</a>, which began trading yesterday.



The ETF showcased one of the largest debuts in terms of volume traded on an opening day in history, recording nearly $1 billion in trading volume, Blockworks previously <a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/" target="_blank" rel="noreferrer noopener">reported</a>.



While the debut of a BTC ETF is a watershed moment for the digital asset industry, it is perhaps the message its approval sends from regulators in the US that makes it so important. In the last month, Jerome Powell has <a href="https://cms.blockworks.co/powell-i-have-no-intention-of-banning-stablecoins/" target="_blank" rel="noreferrer noopener">stated</a> “I have no intentions to ban” cryptocurrencies, and SEC chairman, Gary Gensler, <a href="https://www.bloomberg.com/news/articles/2021-10-05/sec-chief-signals-crypto-ban-like-china-s-won-t-happen-in-u-s" target="_blank" rel="noreferrer noopener">said</a> he “has no plans of banning crypto”.&nbsp;



However, actions speak louder than words. The SEC allowing a BTC ETF to launch gives potential market participants the confidence to begin dipping their toes in the water. One of the main reservations surrounding cryptocurrencies has been the lack of regulatory clarity.&nbsp;



Ray Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, <a href="https://seekingalpha.com/news/3739960-ray-dalio-regulators-will-kill-bitcoin-if-its-really-successful" target="_blank" rel="noreferrer noopener">said</a> &#8220;At the end of the day, if it&#8217;s really successful, they&#8217;ll kill it,&#8221; in regards to bitcoin. But with China’s recent <a href="https://cms.blockworks.co/cryptos-decline-as-china-doubles-down-on-regulations-markets-wrap/" target="_blank" rel="noreferrer noopener">crackdown</a> on digital assets, many industry players are urging lawmakers to take the opposite approach and position the US as a leader in the innovative industry.



Bitcoin Market Structure



There is a lot less leverage in the market today than there was in April of 2021 when BTC last traded in the $60,000’s. <a href="https://analytics.skew.com/dashboard/bitcoin-futures" target="_blank" rel="noreferrer noopener">Futures open interest</a> has yet to surpass all-time highs seen in April. The <a href="https://app.laevitas.ch/dashboard/btc/futures/basis" target="_blank" rel="noreferrer noopener">annualized basis yields</a> are a third of what they were earlier this year, and although <a href="https://app.laevitas.ch/dashboard/btc/futures/basis" target="_blank" rel="noreferrer noopener">perpetual funding rates</a> are racing higher, they are not at the same levels as they were six months ago.&nbsp;



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="512" height="286" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC-1.jpg" alt="" class="wp-image-9635" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC-1.jpg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC-1.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC-1.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC-1.jpg?w=467 467w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC-1.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC-1.jpg?w=80 80w" sizes="(max-width: 512px) 100vw, 512px" /></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="512" height="286" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC2.jpg" alt="" class="wp-image-9636" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC2.jpg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC2.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC2.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC2.jpg?w=467 467w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC2.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC2.jpg?w=80 80w" sizes="(max-width: 512px) 100vw, 512px" /></figure></div>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The setup on BTC looks very similar to how it was at this time last year, wherein the bellwether outperformed other Altcoins and posted a massive rally in Q4.” Delta Exchange CEO, Pankaj Balani, wrote to Blockworks. “We expect BTC to outperform other cryptos here and expect to see a 6 figure price on BTC before the end of this year.”</blockquote>



While there may be a short-term pullback in price to wash out any excess leverage that has built up on the exuberance of surpassing all-time highs, the on-chain data shows that the next leg higher could just be getting underway.&nbsp;



On-chain analyst, Dylan LeClair, <a href="https://deepdivebtc.substack.com/p/the-daily-dive-070-short-termlong" target="_blank" rel="noreferrer noopener">explains</a>, “When the STH:LTH (short-term holders:long-term holders) realized price ratio is increasing, it means that the cost basis of STHs is increasing relative to LTHs, and conversely when STH:LTH realized price ratio is decreasing, the cost basis of LTHs is increasing relative to the cost basis of STHs. This is extremely insightful, as the price of bitcoin rises when the marginal seller is exhausted.”



As seen in the chart below, the STH:LTH Realized Price Ratio is just beginning to bottom out, indicating a lot of further upside remains for BTC’s price.&nbsp;



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="512" height="286" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC3.jpeg" alt="" class="wp-image-9637" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC3.jpeg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC3.jpeg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC3.jpeg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC3.jpeg?w=467 467w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC3.jpeg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC3.jpeg?w=80 80w" sizes="(max-width: 512px) 100vw, 512px" /></figure></div>



As of reporting, bitcoin was last <a href="https://coinmarketcap.com/currencies/bitcoin/" target="_blank" rel="noreferrer noopener">trading</a> at $66,408.37, up 5.84% over the last 24 hours. Over the last six months, bitcoin (blue line) has gained 69.92% versus its inflation hedge counterpart, gold (orange line), which is down -5.93% over the same period.



<div class="wp-block-image"><figure class="aligncenter size-full"><img loading="lazy" decoding="async" width="512" height="357" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC4.jpg" alt="" class="wp-image-9638" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC4.jpg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC4.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC4.jpg?w=369 369w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC4.jpg?w=374 374w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC4.jpg?w=314 314w, https://blockworks-co.imgix.net/wp-content/uploads/2021/10/BTC4.jpg?w=80 80w" sizes="(max-width: 512px) 100vw, 512px" /></figure></div>



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

ETFs Fuel Bitcoin Rally, $70K on the Horizon

Sam Reynolds

<div id="highlights-block_615f57b16445b" class="highlights">
 <ul>
 <li>Singapore’s QCP Capital says there are many reasons to be bullish about bitcoin’s future price prospects as the price cruises past $55,000</li>
 <li>But at the same time, QCP Capital points out that the market of 2021 is different from that in 2020 and some caution is to be exercised before expecting a moonshot</li>
 </ul>
 
</div>



Bitcoin breached the $55,000 mark this week on strong fundamentals and is closing in on its all-time high of $64,000 set earlier this year. But the question is, will the fourth quarter of 2021 be like the bull market of 2020, where bitcoin posted a nearly 180% rally? Maybe, says Singapore’s QCP Capital.&nbsp;



In a note posted on its Telegram Thursday afternoon, QCP Capital said that the market is “hopeful” a similar rally will occur during the fourth quarter, as bitcoin is up 16% since the start of the week. QCP says that the “speed and size of the move has been surprising” and was likely accelerated by short squeezes on positions that were short bitcoin.



In addition, QCP noted that the stabilization of the <a href="https://cms.blockworks.co/evergrande-sells-more-assets-shares-halted-in-hong-kong/" target="_blank" rel="noreferrer noopener">Evergrande</a> situation, and warm signals that bitcoin ETFs might soon be approved in the US are reasons for market optimism. 



The fund also points out that institutional interest in bitcoin is once again driving price velocity, pointing to significant increases in open interest on CME Bitcoin Futures, an institutional focused exchange.&nbsp;



“The premium versus spot of the CME futures has been the highest among the major exchanges This is noteworthy as the CME futures premiums are typically compressed due to the cash-and-carry spread trades that institutional players like to put on. The unusually large premium indicates an overwhelming amount of outright buying,” QCP wrote.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">this is the real flippening that everyone should be focusing on <a href="https://t.co/mSGCyPZwuE">pic.twitter.com/mSGCyPZwuE</a>&mdash; Joshua Lim (@joshua_j_lim) <a href="https://twitter.com/joshua_j_lim/status/1445750543465418752?ref_src=twsrc%5Etfw">October 6, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3 class="wp-block-heading">2020 bull market flashback</h3>



Rewind to the fourth quarter of 2020, and institutional interest in bitcoin, buoyed partially by the Office of the <a href="https://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-98.html" target="_blank" rel="noreferrer noopener">Comptroller of the Currency’s green-light</a> on custodianship of crypto was one of the large driving forces behind the rally that closed off the year. So, in 2021, can the same be repeated?



Perhaps, believes QCP, but there are a few things to be cautious about.&nbsp;



First, the market is much more leveraged than last year even though the most <a href="https://cms.blockworks.co/token-metrics-parallels-with-ftx-and-binance-leverage-downgrade-uniswap-delistings/" target="_blank" rel="noreferrer noopener">extreme leverage tools</a> are unavailable to many retail traders. Open interest is more than triple than it was last year, QCP notes, and bitcoin open interest is “reaching levels that tend to precede market sell-offs.”



The fund also noted that the options market continues to point to a nervous market. Bitcoin has only recently recovered from a persistent downside skew to neutral, they wrote.&nbsp;



QCP noted that they are seeing large demand for Algorand calls this week. While QCP said that it&#8217;s been a “laggard” layer-1 protocol in terms of price, the team behind it is working hard on the ecosystem and it&#8217;s worth keeping an eye on during the next quarter. 



The price of Bitcoin is currently $54,290, according to <a href="https://www.coingecko.com/en/coins/bitcoin" target="_blank" rel="noreferrer noopener">CoinGecko</a>, down 1% on-day.

QCP Capital: Will Bitcoin’s Q4 Rally Repeat the Bull Market of 2020

<div id="highlights-block_6140cd8501928" class="highlights">
 <ul>
 <li>At the recent SALT conference in New York, Ark’ CIO Cathie Wood said her firm is “watching” Ethereum and calls for a 60-40 bitcoin-ether portfolio balance </li>
 <li>Wood also believes bitcoin can hit 500,000 — if more companies double-down and put it on their balance sheet</li>
 </ul>
 
</div>



Ark Invest’s Cathie Wood doubled down on her crypto convictions at the recent SALT conference in New York, sharing price predictions and a renewed enthusiasm for ether.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Cathie Wood: Bitcoin could be worth $500,000 if institutions start allocating 5% of their funds towards it <a href="https://t.co/I4LObnsq0m">pic.twitter.com/I4LObnsq0m</a>&mdash; Blockworks (@Blockworks_) <a href="https://twitter.com/Blockworks_/status/1437536668794433540?ref_src=twsrc%5Etfw">September 13, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Wood said her firm is keeping an eye on ether, saying that “Our confidence in ether has gone up dramatically as we&#8217;ve seen the beginning of this transition from proof-of-work to proof-of-stake.&#8221;



While Ark doesn’t own any NFTs, according to Wood, she said that the explosive growth in use of Ethereum thanks to NFTs is bringing new investment opportunities.



&#8220;Ether is seeing an explosion in developer activity thanks to NFTs and DeFi,&#8221; she said on stage. &#8220;I&#8217;m fascinated with what&#8217;s going on in DeFi, which is collapsing the cost of the infrastructure for financial services in a way that I know that the traditional financial industry does not appreciate right now.&#8221;



<h3 class="wp-block-heading">Picking favorites</h3>



According to <a href="https://whalewisdom.com/stock/ethe" target="_blank" rel="noreferrer noopener">13F filings,</a> Ark Investment Management is the largest holder of Grayscale’s Ethereum trust holding approximately $16.1 million in shares. 



Aside from ether, Wood is still quite bullish on bitcoin predicting prices to possibly hit the six-figure range.&nbsp;



“We believe the price will be tenfold what it is today. Instead of $45,000, over $500,000,” Wood said on stage. But, that requires “companies to continue to diversify their cash into something like bitcoin, and institutional investors start allocating 5% of their funds in bitcoin,” she added.&nbsp;&nbsp;



When asked what crypto she’d hold if she only could pick one, she responded that answering that question is becoming “harder and harder” but she’d still probably pick bitcoin.&nbsp;



“I think I’d still default to bitcoin because countries are now deeming it legal tender and we haven’t even put that into our thinking,” she said.&nbsp;



Ark holds about $284.9 million of shares of Grayscale’s Bitcoin Trust, and it makes up approximately 5.5% of the ARK Next Generation Internet ETF.



However, according to a recent filing from Ark, the fund is now able to hold “exchange-traded funds domiciled in Canada.” This comes as the SEC continues to delay approval of a bitcoin ETF, with many investors looking north to Toronto — which first listed bitcoin ETFs earlier this year — instead. Given this competition for investment-grade bitcoin products, the GBTC <a href="https://cms.blockworks.co/grayscale-bitcoin-trust-premium-hits-all-time-low/" target="_blank" rel="noreferrer noopener">discount</a> continues to trade in the double-digits <a href="https://ycharts.com/companies/GBTC/discount_or_premium_to_nav" target="_blank" rel="noreferrer noopener">hitting -15%</a> Monday. The price of bitcoin is currently at $46,794, up 5%, according to <a href="https://www.coingecko.com/en/coins/bitcoin" target="_blank" rel="noreferrer noopener">CoinGecko</a>.



Are you a UK or EU reader that can’t get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a> in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.

Ark Invest Cathie Wood is Bullish on ETH as Proof-of-Stake Transition Nears

<div id="highlights-block_6138e7082d971" class="highlights">
 <ul>
 <li>Standard Chartered’s new crypto research team is more bullish on Ethereum than bitcoin </li>
 <li>The uses cases for Ethereum are more practical than bitcoin, the bank says</li>
 </ul>
 
</div>



The new digital asset research team at Standard Chartered sees Ethereum going as high as $35,000, but only if bitcoin nears $175,000, according to a research report <a href="https://www.reuters.com/technology/standard-chartered-sees-bitcoin-hitting-100000-by-early-next-year-2021-09-08/" target="_blank" rel="noreferrer noopener">released</a> Tuesday. 



The team at Standard Chartered anticipates that bitcoin will double by the end of the year or early in 2022. The bank’s structural value for Ethereum is between $26,000 and $35,000, but only if bitcoin starts to trade at the top of their value range, which is between $50,000 and $175,000.&nbsp;



For bitcoin, &#8220;cyclically, we expect a peak around $100,000 in late 2021 or early 2022,” Geoff Kendrick, head of emerging market currency research and crypto research at Standard Chartered, said.&nbsp;



As far as the timeline for the price target, Kendrick said that bitcoin’s halving cycle, which occurs every 210,000 blocks, is a key figure to watch.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“I think the main driver of the whole asset class is the cyclical nature of the halvings that happen in bitcoin supply where every four and a half years there is a halving of the number of new bitcoins issued,” Kendrick said. </blockquote>



If and when bitcoin reaches $100,000, Ethereum will increase as well, likely hitting around $15,000 by the first half of 2022, he said.&nbsp;



“To get to the bigger-picture value, like $26,000 to $35,000, we might have to wait until we get the next bitcoin cycle, which doesn&#8217;t kick in until 2024, at which time I suspect it becomes feasible for bitcoin to go to the top of the valuation range at $175,000,” said Kendrick. “If we could get to that, or there about, then I think that allows Ethereum to go towards the top of its valuation range.”



The Standard Chartered team is more bullish on Ethereum than bitcoin, Kendrick said, because the use cases for bitcoin are far more limited.&nbsp;



“Peer-to-peer electronic payments, that&#8217;s it. That&#8217;s the only use, really, for bitcoin in a practical sense, as well as its store of value,” said Kendrick.&nbsp;



Ethereum, on the other hand, can take on a more “financial market” role.&nbsp;



“ETH serves more as a facilitator of a larger software platform hosting a&nbsp; variety of decentralised applications (dApps) and contracts, which together constitute the&nbsp; Ethereum network,” the report said. “This gives rise to a much wider set of use cases.”&nbsp;



Use cases include non-fungible tokens, which have <a href="https://cms.blockworks.co/nft-craze-rages-on-as-august-sales-near-900m/" target="_blank" rel="noreferrer noopener">exploded in popularity</a> in recent months, and decentralized autonomous organizations, which have also <a href="https://cms.blockworks.co/the-future-of-daos-how-the-investment-landscape-is-evolving/" target="_blank" rel="noreferrer noopener">been on the rise</a> this year.



Regulation, particularly when it comes to classifying digital assets and tokens, poses a risk to the future growth of the market, Kendrick said. 



“There&#8217;s clearly a risk to Ethereum that at some point the SEC will view it as equivalent to equities,” said Kendrick. “That would be inverted brackets negative.”



Are you a UK or EU reader that cant get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a> in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.

Standard Chartered is Bullish on Ethereum, But Only if Bitcoin Rises

Ben Strack

<div id="highlights-block_6137a05dc5f8f" class="highlights">
 <ul>
 <li>Solana’s token price was up 11.2% in the past 24 hours and up 54.7% from a week ago as of Noon eastern on Tuesday, according to CoinGecko</li>
 <li>The market share of altcoin investment products is at a record 35%, a CoinShares report found, with Ethereum AUM representing a record 28%. </li>
 </ul>
 
</div>



Solana and cardano tokens, two Ethereum competitors, have gone in different directions over the last several days as altcoins continue to gain market share from bitcoin.



Cardano’s ADA token price has dipped after <a href="https://cms.blockworks.co/cardano-ada-token-price-rises-as-hard-fork-hits-testnet/" target="_blank" rel="noreferrer noopener">rising above $3 last week</a> following the hard fork of the blockchain platform’s testnet. The network’s Alonzo upgrade, which will enable smart contract functionality, is set to go live on Sept. 12.



ADA was at $2.44, as of Noon eastern, according to CoinGecko, representing a 14.2% dip and 10.6% decrease over the past 24 hours and last seven days, respectively. The token’s market share, which is third-highest behind only bitcoin and Ethereum, has fallen from over $90 billion to about $78 billion.



Meanwhile Solana’s SOL token price rose to $169.73 at that time, CoinGecko indicates. That price was up 11.2% in the past 24 hours and up 54.7% from a week ago. SOL’s price was 331% higher than it was 30 days ago. Its rise is monumental considering that SOL suffered nearly $108.4 million in <a href="https://cms.blockworks.co/bitcoin-drops-nearly-11-tuesday-on-whale-leverage-liquidations/" target="_blank" rel="noreferrer noopener">liquidations</a> in the first four hours of US trading on Tuesday as the market dipped.



Matthew Sigel, head of digital assets research at fund manager VanEck, <a href="https://cms.blockworks.co/competition-in-layer-1-space-continues-to-heat-up/" target="_blank" rel="noreferrer noopener">previously told Blockworks</a> that the proliferation of competing Layer 1 smart contract platforms has come about amid a higher demand for transaction prices and throughput that are lower and faster than what the Ethereum network provides. 



He labeled Solana as the leader among about half a dozen Layer 1 smart contract protocols that could someday rival Ethereum, pointing to its potential of 50,000 transactions per second.



<a href="https://ospreyfunds.io/media/" target="_blank" rel="noreferrer noopener">Osprey Funds</a> revealed last month that it is seeking to bring an <a href="https://cms.blockworks.co/osprey-funds-looking-to-offer-solana-trust/" target="_blank" rel="noreferrer noopener">investment offering focused on SOL</a> as the token became a top 10 digital asset by market capitalization.



<h3 class="wp-block-heading">Bitcoin sees inflows, but altcoins stealing market share</h3>



The price changes come after digital asset investment products saw inflows of $98 million last week, according to a CoinShares report, up from $24 million the week before.&nbsp;



The figure reflects a turnaround for bitcoin (BTC), which raked in $59 million last week after seeing outflows of about $4 million the week prior. Bitcoin had eight consecutive weeks of outflows before last week despite its year-to-date inflows of about $4.2 billion.



BTC’s price was at nearly $47,000 early Tuesday afternoon, a 9% decline from 24 hours before, CoinGecko data indicated.&nbsp;



“We believe a combination of the El Salvador acceptance and positive price momentum in recent weeks is prompting the inflows,” CoinShares Investment Strategist James Butterfill told Blockworks in an email. “In comparison to the run of outflows in 2018, where there were 6 consecutive weeks, it looks like the outflows had run their course.”



Though inflows were seen across all digital assets, altcoins, on an assets under management-weighted basis, remain the favorite amongst investors. Altcoin market share is now a record 35% of investment products.



Solana had weekly inflows of $13.2 million last week, doubling its total inflows year-to-date, while Cardano had inflows of $6.5 million.



But despite inflows into Solana and Cardano, Ethereum’s dominance continues to rise. It saw a third week of inflows amounting to $14.4 million, and its market share &#8211; based on assets under management &#8211; is at a record 28%.



<h3 class="wp-block-heading">Will Ethereum remain dominant?&nbsp;</h3>



Though bitcoin has historically dictated the macro trend and remains the broader crypto market’s safe-haven crypto asset, September could consist of select altcoins dislocating from BTC amid neutral and positive price action, according to crypto exchange Kraken’s August <a href="https://kraken.docsend.com/view/q32wv4r574vbrsuk" target="_blank" rel="noreferrer noopener">Market Intelligence Report</a>. As a result of Ethereum’s London hard fork and EIP-1559  upgrade, about 155,000 ETH, or $549 million, was burned in August, the report noted.



The NFT boom has also brought more attention to Ethereum. OpenSea, the largest NFT marketplace, <a href="https://cms.blockworks.co/opensea-hits-3b-in-monthly-nft-volume/" target="_blank" rel="noreferrer noopener">hit $3 billion</a>, or 925,0000 ETH, in monthly volume or 925,000 ETH following the public sale of the Bored Ape Yacht Club NFTs.



“Whether you think the current hullabaloo over NFTs is a clear sign of an irrational mania or the early innings of a massive trend … it’s undeniably bullish for ETH, where the vast majority of NFTs are minted and traded,” said Matt Weller, global head of market research at <a href="http://forex.com/">Fore</a><a href="http://forex.com/" target="_blank" rel="noreferrer noopener">x</a><a href="http://forex.com/">.com</a>.



ETH’s price was $3,481 just after Noon on Tuesday, which was down about 11% from the day before.



Ethereum’s inflation rate is down to roughly 1% over the last month, he explained in a research note, adding that the supply of Ethereum may even turn deflationary early next year once the network shifts from proof-of-work to proof-of-stake security under the scheduled Ethereum 2.0 upgrade.



While Ethereum faces the challenge of high gas fees and slow transaction times, it benefits from currently having greater scale, Butterfill said.&nbsp;



“It’s quite possible for a less efficient crypto to maintain this market lead as it occurs in the old economy too,” he explained. “Strictly speaking the US dollar shouldn’t be the global reserve currency of the world given its quantitative easing program over the last decade, but it has the advantage of being the incumbent, and it’s likely the same for Ethereum.”



Are you a UK or EU reader that cant get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a> in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.

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