Dispatch #202: A New Era for Ethereum

Jul 26•5 min read

In this patch of your weekly Dispatch:

  • Tech Stocks Down 📊
  • A Crypto Supercar 🏎️
  • Bitcoin in 2050 ✨

The Big Idea

ETH’s Debut on the ETF Scene

Dispatch readers set the topic for this week’s issue with a near-unanimous decision in our weekly poll. The headline in crypto this week is the start of trading for the newly-launched spot Ether ETFs in the USA. The scenario that unfolded in the first two days was somewhat familiar. BlackRock’s iShares Bitcoin Trust (IBIT) led in inflows, while Grayscale saw significant outflows, with ETH holders realizing profits on their 2017 holdings. 

Here are the figures that matter:

Day 1, 23 July:

  • Spot Ether ETFs debuted with $107.8M million in inflows and over $1B in trading volume. BlackRock’s iShares Ethereum Trust (ETHA) led with $266.5M in inflows, followed by the Bitwise Ethereum ETF (ETHW) with $204M. On the negative, Grayscale’s Ethereum Trust (ETHE) experienced $484.1M in outflows.

Day 2, 24 July:

  • On Wednesday, U.S. spot Ether ETFs saw net outflows of $113.3M, largely due to $326.9M exiting Grayscale’s Ethereum Trust (ETHE), which has seen $811M in total outflows since its conversion to an ETF. Despite this, seven of the eight new Ether ETFs posted net inflows, with Fidelity’s Ethereum Fund (FETH) and Bitwise Ethereum ETF (BITW) leading with $74.5M and $29.6M, respectively.

Bloomberg’s James Seyffart called it a “very solid first day”, adding that the ETFs “traded about 24% of the day one volumes for bitcoin ETFs, and they took in 16.5% of the flows compared to Bitcoin ETFs’ day one”. However, the charts tell a different story, with ETH’s reaction being a near 10% slump mid-week. This mirrors Bitcoin’s performance six months ago when similar products launched. It took a few weeks for the market to absorb holdings from the Grayscale trust.

Which brings us to this week’s big idea: With the world’s second most significant digital asset now freely available for trading to the biggest global investors, could Ethereum go into new-price discovery soon? We have a feeling patience in the markets could come to be appreciated.

The Latest In…

Blame It on the Tech Stocks

Amidst all the ETF excitement, Bitcoin and Ethereum prices plummeted on Wednesday. BTC fell below $65,000, while ETH dropped nearly 8%, trading at $3,177. This downturn mirrored a broader market slump, with the Nasdaq 100 index dropping 3.65% – its steepest decline since October 2022.

The tech sector played a pivotal role in this market correction: Alphabet Inc., Tesla, and Nvidia were all down, falling over 5%, 12%, and 6.8% respectively, amid waning investor enthusiasm and disappointing earnings reports.

However, there are signs of optimism for both Bitcoin and Ethereum:

  • BlackRock’s Spot Bitcoin ETF Inflows: The iShares Bitcoin Trust (IBIT) marked its largest share of inflows ($523M) in four months.
  • Positive Ethereum Outlook: Reports in the media remain optimistic about Ethereum long-term, noting “ETH’s price trajectory may gradually converge with its previous ATH.” It’s all about sustained institutional interest and the recent approval of spot Ether ETFs as key drivers for future growth.

The Latest In…

The New Way to Buy Your Ferrari

Ferrari is shifting into high gear by extending cryptocurrency payments to its European dealers starting at the end of July. Building on a successful U.S. rollout last year, the iconic luxury carmaker plans to expand this initiative globally by the end of 2024 in other crypto-friendly regions. Despite their volatility, Ferrari is embracing digital assets  to meet the demands of its wealthy clientele. In the U.S., Ferrari accepts Bitcoin, Ether, and stablecoins seamlessly converting crypto into traditional currency to protect dealers from market fluctuations. However, as noted on social media, if you’ve got the crypto, we’ve got you covered on the Ferrari, without selling your assets!

The Latest In…

A Self-fulfilling Prophecy?

Imagine a future where Bitcoin isn’t just a digital currency but a cornerstone of global finance. A VanEck report discusses this potential, predicting Bitcoin could reach $2.9M per coin by 2050, driven by its adoption as a global medium of exchange and reserve asset. This scenario envisions Bitcoin handling 10% of international trade and 5% of domestic trade, with central banks holding 2.5% of their assets in BTC. Even in a bear market, Bitcoin could hit $130,314, while a bull market might see it soar to $52.4M per coin.

VanEck highlights Bitcoin’s transformative potential, addressing scalability through Layer-2 solutions like the Lightning Network. However, challenges such as rising energy demands, sustainable transaction fees, and regulatory risks remain. Despite these hurdles, Bitcoin could emerge as a flexible and efficient reserve currency, akin to gold but with greater versatility.

The Week’s Most Interesting Data Story

Is ETH About to Go Wild?

Derivatives traders are anticipating significant volatility for Ethereum this week, particularly due to the launch of spot Ethereum ETFs on Tuesday. Analysts predict that ETH might experience initial selling pressure as the ETF launches before a gradual recovery. The increased open interest and a high put-call ratio suggest that traders are bracing for substantial price fluctuations.

Hot Topics

What the Community is Discussing:

Surely that’s a bullish profile picture?

We’ve submitted the Bitcoin emoji petition 🤞

The dashboard for ETH ETF enthusiasts!

What to Watch for Next Week:

  • ETH ETFs – How was the first week?

  • Bitcoin Infrastructure – What’s new in 2024?

  • The Bull Run – Do we get more?

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