Dispatch #180: Ether’s Stage Is Set

Feb 23•4 min read

In this patch of your weekly Dispatch:

  • Bitcoin Bulls Unite 🐂
  • The Star of AI ⭐
  • A Crypto Record 📈

The Big Idea

The Struggles at $3,000

We’ve seen it before, haven’t we – the price spiking, the big names commenting, the regulators rushing, as it becomes the talk of the town. Sorry for the typos – it is ETH, indeed. The prospects of an ETH rally have been documented on Dispatch, but when the likes of Forbes and Bloomberg pick up on the biggest development in crypto, your trusted crypto-native informant is on the job for a weekly sum-up 🫡.

Current Status: ETH has been ripping up the charts this week, breaking $3,000 for the first time since 2022. That upward rush has coincided with a surge in open interest to over 10B (we’ve got the chart below). Other ETH movers include the upcoming Dencun upgrade and the potential approval of an ETH-based spot ETF in the USA. What Bitcoin did recently, in effect.

The Headwinds: S&P Global Ratings warns that Ethereum spot ETFs could concentrate validation power and thus increase risk. They anticipate SEC approval for spot ETFs by May, suggesting ETF issuers spread holdings across custodians to reduce centralization risks. Which brings us to, potentially, the main headwind – regulatory approval.

The Tailwinds: Reputable research firm Bernstein notes that ETH “may be probably the only other digital asset likely to get a spot ETF approval by the SEC.” They also highlight a 50% chance of the new “institutional darling” coming to life this year. It’s worth noting that spot Ethereum ETF applications have already been filed by true industry behemoths like Franklin Templeton.

This leaves us in no-man’s land, for now at least. Yet research out of Australia reveals the positive effects of ETF approval on an asset – 25% are saying they view BTC more favorably after the ETF approval and we’ve seen how that turned out for price. Can Ether hop on stage with the same trick?

The Latest In…

The Ingredients of a Rally

Any attempts to shadow Bitcoin were quickly put to rest, as it claimed back the $1T market cap earlier this week. Here are the main reasons, backed by numbers and facts:

  • Bitcoin ETFs saw record inflows last week, attracting $2.4B in total investments, according to CoinShares. BlackRock's IBIT and Fidelity's FBTC dominated with $1.6B and $648M, respectively.
  • Michael Saylor affirmed he intends to hold onto MicroStrategy's BTC reserves indefinitely, viewing them as a superior asset class. With 190,000 Bitcoin acquired at an average price of $31,224, worth around $10B today, Saylor’s in profit. $4B of it.
  • Large whale investors are refraining from significant short positions. They anticipate further price increases with Bitcoin call options for June's end-of-month expiry centered above $60,000, to mark the expectations post-Halving.

The Latest In…

Is Nvidia for AI What Bitcoin Is for Crypto?

Nvidia's latest earnings report highlighted soaring demand for generative AI and accelerated computing. Founder and CEO Jensen Huang noted widespread global interest in these technologies. The company reported record-breaking revenue of $22B for the fourth quarter, up 265% from the previous year. Net income surged by 769% annually to $12.28B for the fourth quarter and $29.76B for the full year. Nvidia's optimistic outlook led to a significant increase in share price despite a temporary decline earlier in the day.

The Latest In…

A World Record for а Worldcoin

We’re simply thrilled when an all-time high record happens, especially when it’s reached by a token listed on Nexo. Worldcoin, co-founded by Sam Altman, has reached a new ATH of $8.65 after the release of OpenAI's Sora AI model. That’s more than doubling in price over the last 10 days. With a market cap now over $1B, the surge aligns with milestones for both Worldcoin and OpenAI – OpenAI's Sora, a text-to-video AI, and Worldcoin's announcement of their World App crypto wallet reaching 1M daily users, have fueled the token's growth. Cheers for that heavenly match that is artificial intelligence and crypto markets.

The Week’s Most Interesting Data Story

Ether’s Best of Interests

ETH traders have waited since 2022 to observe this amount of open interest in futures markets – over $10B. Arguably, it is this increased trading activity that supports an asset’s rally, too. And if the chart is historically correct, we haven’t seen ETH’s price swings in full just yet.

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What to Watch for Next Week:

  • Stablecoins – the liquidity of crypto
  • Bitcoin Halving – the economic effects
  • DeFi – the key players in 2024