Into the Ether
Key Takeaways
- After playing second fiddle to Bitcoin during the leading cryptoasset's run at all-time highs in late October, ETH finally got its moment in the spotlight as it surged from below $4,000 last week to reach a new all-time high.
- Activity on the Ethereum network has increased dramatically in recent weeks as reflected in transaction count and fees paid, indicating increased demand for blockspace.
- Bullish supply dynamics are also supporting ETH price. The Ethereum network surpassed 750,000 ETH burned since the implementation of EIP 1559 and experienced its first week of net negative issuance.
- Based on observed P/S multiples, we can ascertain that the Ethereum network is reasonably priced relative to its historical trading multiples.
- Bitcoin continues to trade at MVRV and P/B multiples well below historical market tops and is priced inexpensively as compared to traditional equity markets.
- Bottom Line: Based on fundamental valuation metrics, both ETH and BTC remain conservatively priced, and we expect a continued push towards BTC and ETH's respective price targets of $100,000 and $10,500 by year-end.
Ethereum Roundup
After playing second fiddle to Bitcoin during the leading cryptoasset's run at all-time highs in late October (excuse me, Uptober), Ethereum f...Reports you may have missed
BTC AS A POSSIBLE STRATEGIC RESERVE Last week, we discussed the rising political tailwinds affecting crypto. Despite events earlier in the year that might have suggested a changed stance from the Democratic Party, the political divide over the issue has grown stronger. The GOP has become the party that is undoubtedly more favorable to the industry. The attempted assassination of former President Trump, juxtaposed against a Democratic Party seemingly in...
Gox Wallet Movements Still Present a Risk, But Macro & Politics Keeps Us Allocated Here (Core Strategy Rebalance)
DISCUSSING THE SUPPLY CONCERNS On balance, macro conditions have moved in our favor thus far in early Q3. We have received soft jobs numbers and softer ISM reports, and cooler inflation figures, which have sent rates and the DXY lower. Unfortunately, the mere reveal of imminent sales from the German BKA and the solidification of the Mt. Gox disbursement timeline were not enough to put a bottom in for bitcoin....
LESSONS FROM OPEC We have witnessed a significant market panic partially related to formerly locked BTC hitting the order books. The major sources of supply include:Mt. Gox – 141,686 BTCUS Government – 8,100 BTCGerman Government – 50,000 BTC At current prices, this would equate to over $12 billion in supply. This threat, combined with an inhospitable macro backdrop (rising DXY, higher rate expectations, hawkish Fed), has brought BTC down to...
LDO Risk/Reward Looks Good Here, Immediate-term Macro Picture Still Uncertain (Core Strategy Rebalance)
FLOWS AND SENTIMENT STILL SUBDUED Last week, we received a better-than-expected CPI print, but the DXY continued to move higher due to global weakness and a hawkish Fed. We discussed the risks appearing in the metrics we use to gauge sentiment and flows. The overall lack of follow-through in the crypto market was evident. Volumes, net ETP flows, the Coinbase discount, stablecoin market cap trend, and search interest for key...