Michael Nadeau, a prominent crypto analyst, recently provided an in-depth analysis of the current and future state of the cryptocurrency market, with a particular focus on Bitcoin (BTC) and Ethereum (ETH).
Michael Nadeau is a well-regarded crypto analyst known for his work at The DeFi Report, where he provides in-depth research and analysis on decentralized finance (DeFi) and blockchain technology. Nadeau is particularly noted for his insights into the performance and valuation of blockchain networks like Ethereum.
According to ETF experts at Bloomberg, ETH ETF flows are expected to represent about 10-20% of BTC ETF flows. This prediction is based on several factors:
- Lower institutional interest in ETH compared to BTC.
- Greater complexity in understanding ETH.
- Lower trading volumes in ETH futures compared to BTC (10-20%).
- Lower spot trading volumes of ETH relative to BTC (about 50%).
- ETH’s market cap being approximately one-third of BTC’s.
Given that BTC ETFs have seen about $13 billion in net flows since their launch, Nadeau suggests that if ETH achieves 10-20% of this figure, it would result in $1.3-$2.6 billion in net inflows for ETH ETFs.
Nadeau draws a parallel between BTC’s price surge after the US-listed spot Bitcoin ETFs launched and potential movements in ETH. BTC saw a 75% gain from $40,000 to $70,000 shortly after its spot ETFs started trading, leading Nadeau to expect a similar performance from ETH, potentially pushing it past its previous all-time high of $4,800.
Several factors could contribute to ETH’s outperformance:
- ETH validators do not have the same “structural sell pressure” as BTC miners, who need to sell a portion of their mined coins to cover operating expenses.
- A significant portion (38%) of ETH supply is “soft locked” on-chain, earning yield in staking contracts, DeFi applications, or as collateral.
- ETH balances on exchanges are at their lowest since 2016, suggesting less sell pressure.
- ETH’s reflexivity could amplify price movements, with price action leading to more on-chain activity, more ETH burned, and further narrative-driven price increases.
Nadeau envisions ETH not just as a cryptocurrency but as a technology play on the growth of Web3, offering a larger addressable market than BTC, which is viewed as “digital gold.”
Nadeau extends his analysis to the broader crypto market, expressing a highly bullish outlook. He anticipates favorable conditions driven by several cycles:
- Innovation Cycle: Continued advancements in blockchain technology and DeFi.
- Macro/Liquidity Cycle: Favorable economic conditions and increased liquidity.
- Election Cycle: Political developments influencing market sentiment.
- Bitcoin Halving Cycle: Historical patterns showing price increases post-halving.
- ETF Approvals: Increased accessibility and interest through BTC and ETH ETFs.
He points out that regulatory concerns have lessened, particularly with the market no longer fearing aggressive actions from regulators like Gary Gensler.
Using a hypothetical $10 trillion market cap for crypto, he makes the following predictions:
- BTC at 40% of the market cap would reach $4 trillion, translating to a price of $202,000 per BTC.
- ETH at 45% of BTC’s market cap would reach a $1.8 trillion market cap, implying a price of $14,984 per ETH.
He points out that this assumes no change in supply from current levels. He also mentions that even more conservative estimates suggest significant price increases for both BTC and ETH.