On May 15, Coinbase Institutional released a research report suggesting that Ether (ETH) could see a surprising increase in the coming months, despite underperforming compared to Bitcoin (BTC) and the broader crypto market this year.
The report highlights Ether's strong long-term potential due to the absence of significant supply side pressures, such as token unlocks or miner sell-offs, which often affect other cryptocurrencies.
Analyst David Han emphasized the growing impact of staking and Layer-2 (L2) solutions on ETH liquidity, which further strengthens its market position.
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ETH's central role in DeFi is expected to remain secure due to the broad adoption of the Ethereum Virtual Machine (EVM) and innovations in L2. The EVM enables developers to create smart contracts and supports the widespread adoption of DeFi applications, whereas L2 solutions built on Ethereum enhance scalability and reduce data bottlenecks.
The report also discussed the impact of potential US approval of spot Ether exchange-traded funds (ETFs):
We think the market may be underestimating the timing and odds of a potential approval, which leaves room for surprises to the upside.
The deadline for the first potential approval of a spot Ether ETF is May 23, 2024. While there is a possibility of initial rejection, Coinbase expressed optimism that litigation could eventually lead to approval.
Overall, the report underscores the importance of Ethereum's unique attributes and the significant role of potential ETF approvals in shaping its future market trajectory.
