On 12 Jan 2024, David Duong, Head of Institutional Research, and David Han, Institutional Research Analyst at Coinbase, released their latest weekly crypto market commentary (title: “Spot Bitcoin ETFs Approved”), in which they discuss the market impact of the U.S. SECs historic decision to approve 11 spot Bitcoin ETFs on 10 January 2024. This event, they note, marks the beginning of exchange trading for these ETFs, providing a new avenue for investments in crypto.
Analyzing the Surge in BTC Trading Volumes
The Coinbase team observed a notable increase in BTC trading volumes following the spot ETF approvals. They report that the volumes surged threefold compared to the 4th quarter of 2023. However, they also highlight the complexity in discerning how much of this increase is attributable to the creation of new ETF shares.
BTC and ETH: A Synchronized Uplift
Duong and Han from Coinbase point out that the approval has positively impacted not just Bitcoin, but also Ethereum. They attribute ETH’s surge to its potential undervaluation relative to BTC and the increasing recognition of ETH as a crucial component in institutional portfolios.
Market Dynamics Post-ETF Approval
The Coinbase analysts predict that the ETF approval will lead to significant inflows into the crypto market, though the exact figures are still uncertain. They anticipate this development to trigger the creation of new financial products centered around these ETFs.
Ethereum’s Enhanced Position Post-Approval
The Coinbase researchers emphasize that Ethereum is emerging as a major beneficiary of the SEC’s decision. They cite the formalization of crypto as an asset class and the heightened probability of a spot ETH ETF as key drivers behind Ethereum’s recent rally.
On-Chain Developments and Community Debates
Focusing on Ethereum’s on-chain adjustments, Duong and Han discuss the ongoing discussions around reducing transaction costs. Simultaneously, they bring attention to the ongoing debates within the Bitcoin community regarding the Ordinals protocol.
Coinbase’s Market Observations and Forecasts
Reflecting on the initial market responses, the Coinbase team notes that Bitcoin’s price remained stable with increased trading volumes following the ETF launch. They also observed a similar positive trend for Ethereum and other high-beta names in the crypto ecosystem.
