Ethereum Ethereum Ethereum

Ethereum outperforming, despite limitations

Anders Nysteen

Senior Quantitative Analyst, Saxo Bank

Summary:  Ethereum outperformed Bitcoin over the past week, but limitations appear in the Ethereum technology, and JPMorgan analysts suggest ETH price should be significantly lower based on network activity. Furthermore, multiple ETF applications in the US are still pending, but may be in a new headwind.


Ethereum outpacing Bitcoin but facing headwind

Ethereum is at record-high market dominance of close to 20%, and ETH gained 15 % last week while Bitcoin delivered close-to-zero return. The use case for Ethereum is boosted through its smart contracts which enables multiple (also non-finance related) applications on Ethereum’s blockchain, and the amount of ETH locked in these smart contracts has increased significantly over the past year. However, Ethereum is facing some challenges, as other cryptocurrencies with smart contracts or similar technologies are competing with Ethereum for the smart contract applications, and they benefit from lower transaction fees than Ethereum. Furthermore, reports are stating that 2-5% of transactions of Ethereum-based decentralized exchanges fail. Lastly, JPMorgan analysts are suggesting that ETH should trade 75 % lower if considering the network usage and activity.

ETF applications still pending in US

Supporters of crypto ETFs are seeing the launch of a crypto ETF in the United States as a way to boost the accessibility to crypto trading and thereby the number of active traders/users. While crypto ETFs are already trading in e.g. Canada, ETF applications are still pending in the United States where no application has made its way through. The United States Securities and Exchange Commission (SEC) requires ETF providers to have an exchange partner before considering their application. Wise Origin recently joined the group of exchange-backed ETF providers, and together with three other ETF providers they now have exchange-backed applications awaiting SECs decision. Several other providers have pending applications, although still without any exchange collaborator. However, the Chairman of the SEC, Gary Gensler, recently told Congress that the crypto market “could benefit from greater investor protection”, hinting to a further need for regulation before the SEC can approve any crypto ETFs, lowering the odds for the applications to go through.
BTC against USD. Source: CoinMarketCap.
ETH against USD. Source: CoinMarketCap.
Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.