In this essay I'm going to investigate whether Bitcoin and Ethereum could achieve new all-time high prices in the short term. For those unfamiliar, Bitcoin ($BTC) and Ethereum ($ETH) are the two largest cryptocurrencies by market value. Their performance defines the crypto market. Word of warning, this will be a chart heavy post.
Both $BTC and $ETH have experienced wild price swings in their histories. An "all-time high" refers to the highest price either asset has reached to date. With growing interest from large investors, could new flows of money push them to break those old records? We'll explore potential drivers like the growth of cryptocurrency investment vehicles called ETFs that could impact the markets.
Now Bitcoin has achieved an unprecedented feat by surpassing its all-time high price in the currency markets of 14 different countries before the halving event. In previous 4-year cycles, BTC did not cross this milestone so early in markets like Japan, Lebanon, Nigeria and others. Some analysts view this as a sign that institutional adoption has accelerated to a degree not seen before, as large investors in these nations gain access through regulated investment vehicles. It suggests global demand for Bitcoin may be reaching an inflection point where new all-time highs are all but assured either before or just after the upcoming halving cuts supply.
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As we analyse charts and exchange inflows, market cycles and halving events, let's do so with an open and optimistic mindset. I believe in the long term promise of decentralization and individual sovereignty, so a little speculation about what's to come can't hurt.
Bitcoin Price Action and ETF Inflows
As we've discussed, Bitcoin is tantalizingly close to reaching its former all-time high price of $69,000 set in late 2021. In recent weeks $BTC has been trading in the $52,000 range, meaning it only needs a pump of around 30% from current levels to set a new record.
What's really got crypto traders buzzing is how close to the ATH Bitcoin finds itself at this point in the four-year market cycle. In previous cycles leading up to the Bitcoin halving, $BTC was much further away percentage-wise - over 65% in 2013 and over 70% in 2017. Something seems different this time around.
Part of that "something" could be growing institutional investment through Bitcoin ETFs. These exchange-traded funds allow traditional financial players to gain crypto exposure through familiar securities.
On an average day, around $250 million has been added to Bitcoin ETF holdings according to on-chain data. With two months to go until the halving event, continued inflows at this pace could mean nearly $15 billion in new buying pressure on Bitcoin markets. That kind of demand influx has the potential to catapult $BTC right on over its old all-time high.
Of course past performance isn't guaranteed, but charts don't lie. Bitcoin has been on a tear since ETF flows really ramped up in February. Could sustained big money investment be the catalyst that sends the original cryptocurrency into a new stratosphere of price discovery? The market is about to find out. Exciting times are ahead as we count down to the halving!
Ethereum Outlook and Institutional Demand
Ethereum has shown strong performance recently, outperforming Bitcoin over the past month based on the ETH/BTC ratio. Fundamentals also point to growing institutional interest in Ethereum.
The final deadline for some anticipated Ethereum spot ETFs is in May 2023, around two months after the Bitcoin halving. Like with Bitcoin, the SEC is expected to approve Ethereum ETFs at this deadline. This will bring institutional investment products for ETH.
Unlike Bitcoin ETFs that simply hold the asset, Ethereum ETFs provide additional yield opportunities. Fund managers can stake $ETH holdings to earn yields of over 4% annually paid in $ETH. Being a deflationary asset that also pays holders a built-in yield could supercharge institutional demand.
As the first programmable blockchain supporting smart contracts and decentralized applications, Ethereum opens more use cases that may attract enterprises. Over $50 billion in value is locked in DeFi protocols like Aave and Compound built on Ethereum. Growing adoption of these protocols signals confidence in Ethereum's future.
With a looming ETF approval and staking yields, projections estimate over $10 billion could flow into Ethereum from institutional investors in the year after the ETFs launch. Combined with existing retail interest, this new wave of demand has potential to boost Ethereum to surpass its old ~$4,800 all-time high set in November 2021.
Ethereum's fundamentals and upcoming access for large investors point to strong institutional demand forming in the months ahead. This could be the catalyst to rocket Ethereum to price levels never seen before.
Performance of Other Top Cryptos
While Bitcoin and Ethereum have shown the most promise based on fundamentals and growing institutional investment trends, it's worth analysing how other large cryptocurrencies may perform over the next few years.
One crypto that failed to regain its all-time high last cycle was Ripple($XRP). In 2018 it reached $3.40, but during the 2021 bull run topped out under $2. This lagging performance could continue, with XRP still facing ongoing SEC lawsuits that add uncertainty. Not to mention security issues.
Cardano($ADA) has also struggled since its cycle peak of $3 in September 2021. It now trades around $0.60, down over 80%.
However, not all altcoins may suffer the same fate. Wannabe Ethereum-killer Solana($SOL) saw huge gains in 2021 amid a flood of NFT and DeFi activity on its platform. It took a serious beating in the wake of the FTX scandal but, if this ecosystem growth sustains, $SOL could surpass its $260 ATH given its theoretical faster speeds and lower costs than Ethereum.
Overall, fundamentals and real-world utility will be key for large altcoins to outperform in the next few years. Those providing innovative solutions may have the best shot at setting new price heights.
In summary,
factors like growing institutional investment through Bitcoin and Ethereum ETFs have the potential to drive unprecedented demand in the months ahead. Bitcoin is tantalizingly close to its old all-time high price and surpassing key levels in multiple currency markets suggests new heights may be reached before the next halving cuts supply.
Ethereum's strong fundamentals as a smart contract platform combined with the ability to earn staking yields from upcoming ETFs could see it rocket past old peaks. Some large altcoins like Solana may also benefit if they can sustain real-world adoption. However, others lacking innovation or facing regulatory issues may struggle like XRP and Cardano did last cycle.
Overall the next year promises to be an exciting time for crypto as new investment vehicles bring fresh capital. Whether Bitcoin, Ethereum or others will achieve new dizzying highs remains to be seen. But one thing is for certain - the potential is there.
I hope you enjoyed exploring these ideas and charts with me. To stay up to date on further developments, be sure to subscribe and share this essay with your fellow crypto enthusiasts. May the markets continue to surprise us - for better or worse! Until next time.
Good and objective summary. I liked the altcoin comparison.
Thank you. I'm pretty biased towards ETH but I try to be objective when I can :-P