Crypto Macro Weekly: Ether (ETH) Pumps 11% Above $2,100 as BlackRock Files For Spot Ethereum ETF as Broader Market Rally Continues

Ethereum Logo Graphic / Source: Adobe

Ether (ETH), the cryptocurrency that powers the smart contract-enabled Ethereum blockchain that remains the dominant chain in the DeFi, NFT and broader web3 industries, stole the spotlight from its bigger rival Bitcoin (BTC) this week, and was last up close to 11% since Sunday after BlackRock filed to set up a US spot Ethereum ETF with Nasdaq.

Ether (ETH) eclipsed $2,100 for the first time since April on Thursday and came close to hitting new highs for the year as BlackRock revealed via its Nasdaq filing that it will soon apply to set up a spot Ethereum ETF with the SEC, just as it applied to set up a spot Bitcoin ETF with the SEC back in June.

BlackRock’s June application to set up a spot Bitcoin ETF was quickly followed by a dozen similar applications from rival asset managers and was undoubtedly an important turning point for the Bitcoin market it 2023.

Indeed, the Bitcoin price is up around 45% since the start of June after hitting fresh highs for the year above $38,000 this week as investors bet that spot Bitcoin ETFs will soon gain approval and this will spur significant institutional inflows into the cryptocurrency.

As per sources cited by Fox Business journalist Charles Gasparino in a tweet on Thursday, BlackRock is growing increasingly confident its spot Bitcoin ETF will be approved by January

Thursday’s announcement of its spot Ethereum ETF plans by BlackRock could be an important turning point for the crypto market.

Since June, Bitcoin has increased its market dominance, outperforming by a significant margin, with the ETH/BTC ratio dropping over 24% at one point.

However, in light of ETH’s latest spot ETF optimism-fuelled pump, the tide could be starting to turn.

Could we be about to transition from a Bitcoin-led bull market, into a broader rally with the likes of ETH outperforming.

ETH to $3K and BTC to $69K? Bullish Calls Are Growing

Prior to BlackRock’s spot Ethereum ETF announcement this week, Matrixport’s head of research Markus Thielen put out a now seemingly very well-timed call for a new period of ETH outperformance, even going as far as calling for a rally back towards $3,000.

Thielen cited an improvement in Ethereum network on-chain activity that has turned the ETH deflationary once again, as well as a technical breakout from a long-term pennant structure.

Meanwhile, Matrixport has reiterated calls for Bitcoin to hit a price of at least $42,000 on spot Bitcoin ETF approvals in the US, while other analysts have outlined the $48,000 level as the next major bullish price target.

Trading.biz analyst Cory Mitchell went even further in a note shared with members of the crypto press earlier this week, predicting that Bitcoin could hit new all-time highs as soon as mid-2024, an 85% rally from current levels.

“Bitcoin uptrends tend to move quickly once they get going, moving hundreds of percent often in less than a year,” he noted, calling this stage of the market “the acceleration phase”.

The “really big gains” historically come a year and a half after Bitcoin price has bottomed, Mitchell explained, which points to a pump coming sometime around mid-2024, with BTC having last bottomed back in November 2022.

“In 2013, bitcoin rallied 1200% in approximately 100 days… in 2017, it rallied 1900% in just under a year… in late 2020, it rallied 400% in about 140 days”.

Macro Takes a Back Seat, But is a Growing Tailwind

Spot crypto ETFs are the big talking point right now, with the broader macro picture taking a back seat in the minds of crypto investors.

But when investors do switch their focus to developments in traditional financial markets, they will notice that current market trends are undoubtedly positive for the crypto market, adding another potentially major tailwind.

While Fed policymakers this week, including Fed Chair Jerome Powell, have tried to warn the market that further rate hikes remain on the table, investors appear to be betting otherwise.

Weaker-than-expected US ISM manufacturing PMI data, seen as a strong lead indicator for the economy’s broader performance, flashed warning signs last week that the US economy is slowing drastically from its strong Q3 performance.

Meanwhile, the US jobs market continues to cool, as evidenced by last Friday’s weaker-than-expected October NFP and unemployment numbers, which should make the Fed’s task in bringing inflation back under control easier, reducing the need for higher interest rates for longer.

Long-term US government bond yields have dumped so far this month, with the 10-year yield last down over 30 bps at 4.6%, and this has helped spur a pump in the US stock market, with the S&P 500 up nearly 5%.

Rising stock prices and falling US yields as investors bet on a less “hawkish” stance from the Fed represent an easing of financial conditions, and cryptocurrencies tend to perform very well in such an environment, as was very much the case in 2020 and 2021.

Smaller Altcoins Take the Lead

In a sign that sentiment in the crypto market is really starting to heat up, major altcoins continue to pump.

In just the past seven days, Chainlink (LINK) has pumped nearly 35%, Solana (SOL) is up over 30% and Polygon (MATIC) is up over 25%.

As per blockchaincenter.net, the crypto market Altcoin Season Index was last at 29, up from 17 at the start of the month, suggesting the crypto market has left “Bitcoin Season” territory (defined as below 25).

However, we remain a long way from being in Altcoin Coin Season (defined as above 75), suggesting that there is a lot of room for disproportionate upside in the altcoin market, assuming the Bitcoin (BTC) price continues to pump.

Looking ahead, crypto traders will remain transfixed on news relating to spot crypto ETFs in the US, but upcoming macro events like next week’s US Consumer Price Index inflation and Retail Sales figures for October could further spur the crypto rally if they trigger a fresh pullback on Fed tightening bets.

Bitcoin bulls will be eyeing a potential test of the psychologically important $40,000 level, while Ether bulls will be pushing for a break above earlier yearly highs inn the mid-$2,100s which could open the door to a pump towards $3,000.