QCP Sees Outperformance Over Bitcoin

• QCP Capital has tipped Ethereum to outperform Bitcoin in the medium term.
• The prospects of securing approval for spot Ethereum ETFs is contributing to this optimism.

Ethereum (ETH), the second-largest cryptocurrency by market capitalization, is expected to skyrocket, with quantitative trading firm QCP Capital projecting sustained outperformance over Bitcoin (BTC) in the medium term.

This positive outlook is fueled by market expectations surrounding the possible approval of spot ETH Exchange-Traded Funds (ETFs). QCP Capital’s latest Market Update report sheds light on the recent developments and key factors contributing to Ethereum’s momentum.

Analysis of Ethereum’s Recent Performance

In the week following the approval of multiple spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC), Ethereum experienced a notable rally of over 5%. In stark contrast, Bitcoin’s price has experienced a decline of over 6% during the same period. QCP Capital’s Market Update highlights a notable shift in the ETH/BTC exchange rate, rising from 0.05 to 0.06 within the past week.

The report further emphasizes the favorable forward trends for Ethereum despite a slight reduction in yields. Ethereum’s 1-month forwards, offering annualized yields of 11–13%, continue to present an attractive investment opportunity. 

Additionally, selling ETH 1-month 2200 Puts is considered a prudent play, with yields exceeding 21% annually. This strategy is particularly appealing if there is a dip in the market following potential Ethereum spot ETF approvals.

Meanwhile, recent data show a movement in the percentage of circulating supply profit for both Ethereum and Bitcoin. Ethereum’s circulating supply in profit has reached a multi-year high of 91.8%, while Bitcoin’s percentage of supply in profit has fallen to 86.2%. Currently, ETH is trading at $2,535, down by 0.3% in the past day. Similarly, Bitcoin is down by 0.02%, trading at $42,710.

QCP also noted the crypto market’s trajectory is poised to be influenced by Bitcoin halving in mid-April and potential Ethereum spot ETF approvals starting in May. While these events unfold, macroeconomic factors may also play a role in shaping the market’s direction. 

The January Federal Open Market Committee (FOMC) meeting, along with the February Non-Farm Payrolls (NFP) and Consumer Price Index (CPI) prints, are events that crypto enthusiasts are closely monitoring for potential impact.

Larry Fink’s Comments on Ethereum ETF 

The idea of an Ethereum spot ETF gained traction after BlackRock CEO Larry Fink stated in an interview that he “sees value” in such a product for the US market. Fink’s remarks came after the company successfully launched its spot Bitcoin ETF. Notably, BlackRock filed with the SEC for a spot Ethereum ETF in November, indicating the growing institutional interest in Ethereum as a viable investment option.

Meanwhile, Eric Balchunas from Bloomberg anticipates SEC approval for an Ethereum spot ETF following the successful Bitcoin ETF approval on January 10. However, opinions on the SEC’s stance diverge. 

SkyBridge Capital’s Anthony Scaramucci sees SEC Chairman Gary Gensler as a potential obstacle, suggesting that approval may be less likely under his leadership. Crypto lawyer Joe Carlasare acknowledges the eventual approval of Ethereum spot ETFs but suggests that the SEC may seek to retain discretion in determining which digital asset ETFs are permitted.

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