Bitcoin’s Ascent to $100,000 and SEC’s Reluctance on Ethereum ETF

Bitcoin is expected to rise to $100,000 in the second half of the year, while the outlook for a spot Ethereum ETF appears less optimistic. These expectations were shared with journalist Colin Wu by macroeconomist Luxon, who spoke under a pseudonym. Read more.

The expert derived this target by assuming that the American asset management industry would invest 1–3% of its AUM in digital gold.

The timing is influenced by the Federal Reserve’s decision to delay a key rate cut from May to June or later, as well as the gradual implementation of institutional plans to invest in Bitcoin.

The specialist acknowledged underestimating the enthusiasm for spot Bitcoin ETFs, which led to a new all-time high before the halving. Luxon described the positive trend as “surprising” given the tight monetary policy and the postponement of its easing.

The expert identified three distinctive features of digital gold as an asset:

1. Indirect rather than direct influence on price by central bank decisions, making Bitcoin an indicator of changes in global liquidity.
2. Low long-term correlation with many assets, underscoring its importance for balancing overall portfolio risk.
3. Easy exchange and acquisition of the first cryptocurrency and higher volatility compared to most major asset classes, offering higher potential returns.

According to Luxon, the Federal Reserve will cut the key rate three times in 2024. He noted that monetary authorities would like to avoid overheating in the event of rapid policy easing. A cautious approach will characterize the Fed throughout the year, the specialist added.

The expert predicted Bitcoin’s continued dominance in the cryptocurrency market. Luxon justified his view with skepticism regarding the approval of an Ethereum-based exchange-traded fund by the SEC.

He cited the regulator’s investigation into the PoS mechanism in the context of security and price manipulation. Another obstacle could be the agency’s classification of the asset as a security.

The specialist did not rule out capital rotation from Ethereum to Polygon and Solana if an ETF for the former is not approved and the number of developers for the latter increases.

“Altcoins would find it harder to gain liquidity, especially in a high-interest-rate environment […]. Within the cycle, there could be significant growth for Bitcoin and relatively weaker performance for its competitors,” concluded the expert.

In May, Bloomberg lowered the chances of a spot ETH-ETF approval to 35%.

On March 8, Grayscale and Coinbase discussed with the regulator the conversion of ETHE into a spot Ethereum-based exchange-traded fund. Regulatory representatives showed little enthusiasm in the discussion. Bloomberg and FOX Business saw this as a reduced likelihood of the product’s approval in May.

Some experts believe the regulator will approve the instruments in May. However, a group of analysts for various reasons doubts this will happen.