Mikkel Rosenvold
1 week ago

Crypto Market Surge Defies Bearish Forecasts, Says Analyst Mads Eberhardt

Despite a bearish outlook from Steno Research, Bitcoin and Ethereum rallied over the weekend, driven by optimism surrounding improved liquidity conditions.
Photo by 24K-Production / DepositPhotos
Photo by 24K-Production / DepositPhotos

Last weekend witnessed a surge in the prices of Bitcoin and Ethereum, defying a bearish outlook by Steno Research. Bitcoin rallied by 8%, and Ethereum by 6%, before both cryptocurrencies settled slightly lower. Mads Eberhardt, a crypto analyst at Steno Research, notes that although their bearish stance has been challenged by this unexpected rally, their core arguments remain intact.

Eberhardt attributes the surge to market anticipation of improved liquidity conditions, with investors factoring in expected enhancements over the weekend. However, he maintains that these liquidity improvements are still months away, reinforcing his continued bearish position. Eberhardt elaborates: "The market conditions that shaped our initial forecast have not changed significantly."

Eberhardt suggests that a shift in their position would require substantial weekly inflows into Bitcoin and Ethereum ETFs, or the approval of a U.S.-based Ethereum spot ETF. Currently, the market presents limited opportunities outside of imminent liquidity growth. "We see no compelling narratives and low activity on Ethereum," he adds, highlighting recent data that suggests flat transaction fees.

Despite venture capital investments in crypto surpassing $1 billion in April, Eberhardt remains cautious about the broader outlook. Institutional investors have also shown interest in Bitcoin ETFs, with BlackRock working to educate pension and wealth funds on their benefits. However, these efforts remain long-term, and analysts like Eberhardt believe that institutional involvement won't yield an immediate impact.

In regulatory news, SEC Chair Gary Gensler faces accusations of misleading Congress on Ethereum's classification as an unregistered security. While this issue remains unresolved, it highlights the uncertainty surrounding the crypto market's regulatory future.

Eberhardt underscores the challenges of increasing trading volumes for Hong Kong's recently launched Bitcoin and Ethereum ETFs, which have shown underwhelming results in their initial trading sessions. The net flows of exchange-traded products globally also reflect mixed sentiment among traditional investors.

The weekend's unexpected rally in Bitcoin and Ethereum, despite a bearish forecast, seems rooted in optimism over liquidity conditions. Nevertheless, Mads Eberhardt maintains his caution, noting that anticipated liquidity improvements are still far off. Until significant inflows are observed or regulatory clarity emerges, Steno Research advises maintaining a careful stance on the crypto market.

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