Crypto Exchange-Traded Products (ETPs), which are investment funds designed to track the prices of particular assets, experienced significant activity in the week ending October 27 2023.
Asset management platforms reveal that these ETPs registered their highest weekly inflows over a year, amassing $326 million.
This sharp increase greatly surpassed the previous week’s figure of $66 million.
With ETPs on the rise, all eyes are once again on BTC and ETH.
Furthermore, considering Ethereum’s Dencun update being visible on the horizon, it seems that the value of this asset is set to continue its rise and perhaps beyond the $2000 mark.
We draw a parallel between ETPs, funds inflow into DeFi, and primary crypto assets to project their prices in the foreseeable future.
Exchange-Traded Products (ETPs) are shooting up.
These inflows are typically indicative of bullish sentiment as they occur when the price of an ETP’s notes or shares climbs faster than its underlying asset.
This phenomenon triggers the fund to acquire more of the asset. Interestingly, this recent surge, marking the fifth consecutive week of ETP inflows, witnessed 90% directed towards Bitcoin ETPs.
Meanwhile, Solana also gained from this bullish market sentiment with $24 million in inflows.
In contrast, Ether funds experienced $6 million in outflows.
The surge in ETP activity may be tied to a growing optimism among investors.
Many anticipate that the U.S. Securities and Exchange Commission (SEC) might soon approve a spot-based Bitcoin ETF in the U.S.
Such approval could result in further inflows to U.S.-based funds.
Despite this optimistic anticipation, the SEC has historically refrained from giving the green light to a spot Bitcoin ETP, as evidenced by the multiple applications over the years.
Notably, Van Eck recently amended its application to address the SEC’s reservations.
ETH Price and the DeFi Inflows
On the Ethereum front, the second-largest cryptocurrency by market capitalization appears poised for a significant breakout, eyeing the crucial $2,000 mark.
Ethereum’s potential move follows its successful completion of a double-bottom pattern after a rebound from the $1,530 support.
Its present price awaits validation at the $1,845 resistance.
Several indicators hint at Ethereum’s bullish trajectory.
The formation of two golden cross patterns and the Relative Strength Index (RSI) showcasing a strength of 75 suggests a continuation of the current upward trend.
At the moment, Ethereum’s current price stands at $1,799, and a move above the $1,850 barrier would further solidify its bullish stance, paving the way to $2,000.
A surge beyond this level could catalyze a significant bull run for Ethereum.
Moreover, Ethereum’s transition to a proof-of-stake (PoS) mechanism has ushered in a burgeoning decentralized finance (DeFi) ecosystem.
The Ethereum-based DeFi space has locked in a total value of $21.27 billion, an impressive feat considering the prolonged crypto winter.
In the last 24 hours alone, we have witnessed inflows of $45 million, translating to $1.49 million in revenue.
Both the rising interest in Crypto ETPs and Ethereum’s impending breakout underscore the crypto market’s vitality and potential for growth in the coming months.
Incoming Dencun Upgrade for Ethereum
The anticipated Dencun upgrade for Ethereum, set for early 2024, represents a pivotal moment in the blockchain’s evolution toward enhanced scalability, according to a recent statement by Goldman Sachs.
“Dencun aims to augment data accessibility for layer-2 rollups through an approach known as proto-danksharding. This will lead to decreased transaction expenses in rollups, benefiting the end-users,” the financial institution highlighted.
A Layer 1 network constitutes the fundamental foundation or core infrastructure of a blockchain.
In contrast, Layer 2 encompasses off-chain solutions or distinct blockchains that operate atop Layer 1 networks.
Rollups expedite transactions on a swifter blockchain or Layer 2.
Subsequently, it transfers the information back to the main blockchain, offering cost-effective operations.
The introduction of proto-dank sharding will “establish the framework for subsequent scalability enhancements, including the integration of danksharding, aligned with the blockchain’s ‘Surge’ development plan,” the statement clarified.
Danksharding is an innovative technique to amplify Ethereum’s scalability.
It adopts the principle of segmenting the network into multiple shards.
However, rather than amplifying transactional throughput, it utilizes these shards to expand storage capacity for data clusters.
To summarise, Dencun is set to amplify Ethereum’s scalability through:
- Rollups
- Fine-tuning transaction fees
- Fortifying network security, and
- Incorporating several maintenance upgrades
Summary
Crypto Exchange-Traded Products (ETPs) witnessed a significant surge in inflows, marking their highest in over a year, as reported by CoinShares.
This bullish trend, with a large portion directed towards Bitcoin ETPs, could be linked to anticipation of U.S. SEC approval for a Bitcoin ETF.
Meanwhile, Ethereum is on the brink of a major price breakout, targeting the $2,000 mark, which aligns with ETH price prediction by Gate.io.
Technical indicators suggest a continuation of Ethereum’s upward trend.
Furthermore, Ethereum’s shift to a proof-of-stake mechanism has fueled the growth of its decentralized finance (DeFi) ecosystem, now valued at over $21 billion.
Both trends, as well as the upcoming Dencun upgrade, underscore the potential for substantial growth in the crypto market in the near future.
0 Comments