Research Summary
The report discusses the impact of the US SEC’s approval of 11 spot bitcoin ETFs on the crypto market, particularly on BTC and ETH trading volumes. It also explores the potential for a spot ETH ETF, the debate around Ethereum gas limits, and the ongoing rift within the Bitcoin core community. Additionally, the report provides insights into the performance of Coinbase Exchange and the week’s notable crypto news.
Key Takeaways
Impact of Spot Bitcoin ETFs Approval
- Boost in Trading Volumes: The approval of 11 spot bitcoin ETFs by the US SEC has led to a significant increase in BTC and ETH trading volumes across global centralized exchanges. The daily average has risen to over US$170B, three times higher than the $56B average per day in 4Q23.
- Increased Interest in Bitcoin Futures: The funding rates on bitcoin perpetual futures have almost doubled, making leverage more expensive. However, the total open interest on perps hasn’t increased significantly over the last week, indicating that more institutional players are closing their long positions.
Prospects for Spot ETH ETF
- ETH as a Beneficiary: The approval of spot BTC ETFs is not only impacting BTC but also ETH, which seems to be emerging as the bigger beneficiary. This is due to ETH’s potential undervaluation relative to BTC and its critical role in many market player benchmarks.
- Increased Odds for Spot ETH ETF: The approval of spot BTC ETFs in the US also improves the chances for a spot ETH ETF, possibly as early as end-May 2024.
Ethereum Gas Limits Debate
- Proposed Increase in Gas Limit: There has been a discussion around measures to reduce the base layer transaction costs on Ethereum, triggered by Vitalik Buterin’s comments that an increase of the gas limit to 40M would be reasonable today in line with computational growth from Moore’s law.
- Concerns and Risks: Other Ethereum researchers have expressed concerns about a fast release, highlighting risks on state size, sync times, history growth, and other impacts to client diversity and more.
Rift within the Bitcoin Core Community
- Debate over Ordinals: The Bitcoin core community is divided over Ordinals, with some members claiming that it’s accelerating Bitcoin adoption and creating a more sustainable transaction fee model, while others believe it is spam and point to the increasing mempool and UTXO set sizes that result from this activity.
- Impact on Bitcoin Community Sentiment: The resolution of this debate will be worth tracking as it is one of the most prominent Bitcoin base layer debates going into 2024. The philosophies driving these discussions shed light on the current Bitcoin community sentiment.
Actionable Insights
- Monitor the Performance of Spot Bitcoin ETFs: With the recent approval of spot bitcoin ETFs, it would be beneficial to closely watch their performance and the impact on BTC and ETH trading volumes.
- Assess the Potential for a Spot ETH ETF: Given the increased odds for a spot ETH ETF, it would be prudent to evaluate the potential impact of such an ETF on the crypto market, particularly on ETH.
- Stay Informed on Ethereum Gas Limits Debate: As the debate around Ethereum gas limits continues, staying updated on the discussions and potential changes could provide valuable insights into the future of Ethereum.
- Understand the Implications of the Bitcoin Core Community Rift: The ongoing rift within the Bitcoin core community over Ordinals could have significant implications for Bitcoin. Understanding these implications could help in making informed decisions about Bitcoin.
