Following the approval of US physical ETFs, Bitcoin is far from done. While new ETP inflows have been modest so far, institutional asset managers might take time for thorough due diligence before diving into the investment. Nevertheless, it is evident that the cost-effective beta to other real assets enhances the convexity of returns relative to traditional precious metals, making crypto appealing in portfolio construction.
The upcoming Halving event, expected for Friday, April 19th, is the next significant milestone. In a November analysis, JPM projected Bitcoin's post-halving production cost to rise from $21,000 to around $43,000. The current market price aligns with expectations, and it could be revisited even with a lower hash rate reduction, as miners in higher-cost locations or with less efficient hardware could exit the market. This suggests the halving event may already be priced in.
Technical analysis points to a noticeable gap between the 200-day moving average and the spot price. Fueled by speculation around positive flows from institutionalizing the asset class, this situation suggests that digital gold might need a pause before its next move. Meanwhile, Ethereum is on an uptrend, driven by speculation around the potential approval of the next ETF candidate.
Despite Bitcoin paving the way, challenges persist for Ethereum, including staking, yield generation, and a comparatively smaller community compared to Bitcoin.
Chart Source: Bloomberg
Credits: Daniele Seca - Investment Manager - FX, Rates & Derivatives at NOVUM CAPITAL PARTNERS SA
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