Coinspeaker
Bernstein Report: Slowdown in Bitcoin ETF Inflows Is Short-term Pause
Despite a recent slowdown in inflow to spot Bitcoin exchange-traded funds (ETFs), research and brokerage firm Bernstein remain confident about the cryptocurrency’s potential. They see this slowdown as a temporary pause and predict Bitcoin will experience a strong upward trend, reaching $150,000 by the end of 2025.
Bernstein Analysts Gautam Chhugani and Mahika Sapra noted a decrease in Bitcoin ETF inflows. They believe this drop is due to the “halving” event and the launch of successful ETFs. These factors brought forward some expected gains for Bitcoin in 2024, leading to a 46% year-to-date increase.
The upcoming integration of Bitcoin ETFs into platforms for private banks, wealth advisors, and brokerages is expected on the horizon. However, there’s a temporary slowdown, and experts remain optimistic about the future growth potential, considering this pause temporary and believing wider adoption is imminent.
Bitcoin ETFs Compliance and Consolidation
Chhugani and Sapra emphasize the time needed for Bitcoin to be widely accepted as a legitimate investment option for diversifying portfolios. However, they acknowledge that platforms must develop robust compliance frameworks to confidently offer Bitcoin ETF products.
Analysts highlight that miners are successfully navigating industry consolidation, with transaction fees stabilizing at approximately 10% of their revenue. This development, combined with the substantial $12 billion net inflow into spot Bitcoin ETFs during 2024, reinforces their optimistic projections for the cryptocurrency’s future.
Bitcoin’s value has experienced a stable period, fluctuation within a confined range of $62,000 to $72,000 since the latter part of February. According to CoinMarketCap, Bitcoin is currently trading at the price of $62,450 with a market capitalization of 1.23 trillion. Bitcoin is 11% down in the last month.
SEC May Reject Ethereum ETFs
According to Bernstein analysts, the US Securities and Exchange Commission (SEC) may potentially reject spot Ethereum ETFs by the May 23rd deadline. The analysts expect the SEC to express concerns about the dependability of the connection between the spot and futures markets for Ethereum.
However, Chhugani and Sapra believe such a denial would likely be challenged in court, similar to the Grayscale Bitcoin ETF case. They see this potential legal battle as an opportunity to further solidify Ethereum’s position as a legitimate asset class.
The analysts explore another possibility for the SEC’s denial: classifying Ether as a security. This scenario, they argue, would create a regulatory clash with the Commodity Futures Trading Commission (CFTC), which currently views Ether as a commodity. Additionally, the CME already trades Ether futures without any security implications.
SEC Decision Impact on Ethereum
Regardless of the SEC’s decision, Chhugani and Sapra believe it could ultimately benefit Ethereum. A denial might trigger litigation, refocusing market attention on the cryptocurrency. They see this, coupled with Ethereum’s recent underperformance compared to Bitcoin, as an attractive risk-reward proposition for investors.
Any potential outperformance by Ethereum could also reignite interest in “ETH-beta” Layer 2 tokens like Arbitrum, Optimism, and Polygon. These tokens, built on top of the Ethereum blockchain, offer faster and cheaper transactions.
The Bernstein analysts conclude their report by highlighting the potential of Lido’s Ether staking platform as a high-growth opportunity. They also mention EigenLayer’s restaking economy, fueled by the potential launch of the Eigen token, as another factor that could accelerate the adoption of the Ethereum ecosystem.
Bernstein Report: Slowdown in Bitcoin ETF Inflows Is Short-term Pause