IMF’s Chief has expressed confidence in the Federal Reserve’s ability to achieve a ‘soft landing’ despite weakening market expectations for interest rate cuts, which have fallen below 150 basis points for 2024. This suggests a less favorable macroeconomic position, yet the crypto market remains insulated from broader market negativity due to optimism over ETF approvals until January 10th.
Institutional entries into cryptocurrencies, especially Bitcoin, have seen a surge due to growing optimism about imminent regulatory approvals. Ethereum (ETH) has witnessed a breakout, driven by this increased institutional interest, leading to a brief price spike above $2,400 on January 2nd.
Ethereum, which underperformed Bitcoin last year, has started the new year strong, potentially breaking the bearish trend. Positive news flow for ETH, including the anticipation of an Ethereum ETF approval, is supporting this upward momentum.
Major asset manager BlackRock applied for a Spot ETH ETF on November 9th, followed by Fidelity. Grayscale’s trust plans to convert into an ETH ETF, adding to the speculative rise.
Expectations of ETF approval are driving institutional capital inflows, with CME’s BTC price trading at a $1,300 premium. Ethereum’s network fundamentals, however, highlight a long-term growth potential beyond speculative surges.
The Ethereum ecosystem’s Total Value Locked (TVL) peaked at $106.7 billion before a sharp decline on November 14th, 2021. In 2023, Ethereum saw significant recoveries in TVL, largely due to liquid staking derivatives like Lido. Growth continued in the top 10 Ethereum DApps, with Spark and Rocket Pool experiencing TVL increases of 18% and 7%, respectively. With a 30-day network inflation at -0.48%, Ethereum is exhibiting deflationary characteristics, burning nearly 119,000 ETH in 30 days, reaching 1.273 million over 474 days. If Ether can maintain $2,400 as support in the short term, it could reach new highs, and the current price may remain attractive relative to future prospects. However, monitoring ETF speculation and volumes is crucial to determine if the positive sentiment will persist.