Proof of Stake
The State of Ethereum: Q2 Snapshot
BitOoda Proof of Stake Research, 6/30/23
Vivek Raman
At the risk of grossly understating the recent regulatory and headline volatility surrounding the crypto space - it was an eventful month as we approach the end of Q2 2023. Sentiment swings in June have been jarring, from the future of crypto in the US looking existentially bleak to an institutional tidal wave reinvigorating hope in the space.
The least volatile facet of the crypto ecosystem in June has (ironically) been crypto prices themselves. The overall theme was a surge in Bitcoin dominance (% of the total crypto market cap belonging to BTC). In June, BTC rose 12% from $27,200 to $30,500. Ethereum closed marginally lower for the month, declining just under 1% from $1,860 to $1,850. Other “alt-coins” (non-ETH L1s, L2s, some DeFi tokens) closed the month significantly lower, seeing declines from 15-30%. Despite the dispersion in price action across crypto assets, the overall tone was bullish, as the tide turned from a series of regulatory actions (culminating in lawsuits against Binance and Coinbase) to a renaissance in institutional Bitcoin ETF filings.
Why did Bitcoin steal the spotlight for June? A few reasons: (1) Bitcoin is the “flight to quality” asset during historical bear markets, (2) BTC has the least
amount of regulatory uncertainty (it is generally accepted that BTC is a commodity), (3) BTC is the gateway into the crypto space for most institutions, and accordingly the focus of major spot ETF contender Blackrock. Not surprisingly, this ETF was for Bitcoin – a filing which catalyzed a sharp rally in BTC from ~$25,000 to north of $30,000.
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At the risk of grossly understating the recent regulatory and headline volatility surrounding the crypto space - it was an eventful month as we approach the end of Q2 2023. Sentiment swings in June have been jarring, from the future of crypto in the US looking existentially bleak to an institutional tidal wave reinvigorating hope in the space.
The least volatile facet of the crypto ecosystem in June has (ironically) been crypto prices themselves. The overall theme was a surge in Bitcoin dominance (% of the total crypto market cap belonging to BTC). In June, BTC rose 12% from $27,200 to $30,500. Ethereum closed marginally lower for the month, declining just under 1% from $1,860 to $1,850. Other “alt-coins” (non-ETH L1s, L2s, some DeFi tokens) closed the month significantly lower, seeing declines from 15-30%. Despite the dispersion in price action across crypto assets, the overall tone was bullish, as the tide turned from a series of regulatory actions (culminating in lawsuits against Binance and Coinbase) to a renaissance in institutional Bitcoin ETF filings.
Why did Bitcoin steal the spotlight for June? A few reasons: (1) Bitcoin is the “flight to quality” asset during historical bear markets, (2) BTC has the least
amount of regulatory uncertainty (it is generally accepted that BTC is a commodity), (3) BTC is the gateway into the crypto space for most institutions, and accordingly the focus of major spot ETF contender Blackrock. Not surprisingly, this ETF was for Bitcoin – a filing which catalyzed a sharp rally in BTC from ~$25,000 to north of $30,000.
Why did alt-coins (alt L1s, L2s, DeFi tokens) underperform in June? Namely due to the lawsuits against Binance and Coinbase in early June, which named several prominent alt-coins as securities. While these are simple allegations at this point, several regulated platforms (e.g., Robinhood) proactively de-listed these alts. While BTC became more investable in June due to the flurry of ETF filings and the generally-accepted commodity standard, alt-coins became less investable due to the regulatory overhang, which will likely persist for the foreseeable future while the market awaits clarity from the courts.
So why did Ethereum end the month flat? ETH is, and always has been, in a unique spot from a regulatory, monetary, and institutional perspective. Although the Binance and Coinbase lawsuits named several alts as securities,
ETH was not mentioned. ETH has already been labeled a commodity several times by the CFTC, which has approved the listing of ETH-based futures already. Many argue that ETH is now “sufficiently decentralized.” As a result, the regulatory outlook for ETH is brighter than that of alt-coins, although arguably not as clear as for Bitcoin.
However, Ethereum has an economy of activity built onto its network. Ethereum has a monetary policy that, post-Merge, has resulted in much lower inflation than even Bitcoin. The Ethereum protocol has a staking yield, and yield is a value-add offering for institutions. ETH is a diversified asset that complements BTC as part of a portfolio. And lastly, the Ethereum network is green; Proof of Stake consumes less power than Proof of Work. Therefore, while the outlook for ETH is wait-and-see, the Ethereum network grows stronger daily and has retained its value against BTC much better than alt-coins.
Let’s examine the state of Ethereum as we close out Q2 2023. It was an eventful quarter, the highlight of which was ETH staking withdrawals going live after ~16mm staked ETH had been locked since December 2020. We will examine the state of ETH staking and end with an economic snapshot of Ethereum.
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
Vivek Raman, denoted by an “AC” on the cover of this report hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or throughhttp://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such.BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
BitOoda Technologies, LLC is a member of FINRA.
“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.
Copyright 2023 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
At the risk of grossly understating the recent regulatory and headline volatility surrounding the crypto space - it was an eventful month as we approach the end of Q2 2023. Sentiment swings in June have been jarring, from the future of crypto in the US looking existentially bleak to an institutional tidal wave reinvigorating hope in the space.
The least volatile facet of the crypto ecosystem in June has (ironically) been crypto prices themselves. The overall theme was a surge in Bitcoin dominance (% of the total crypto market cap belonging to BTC). In June, BTC rose 12% from $27,200 to $30,500. Ethereum closed marginally lower for the month, declining just under 1% from $1,860 to $1,850. Other “alt-coins” (non-ETH L1s, L2s, some DeFi tokens) closed the month significantly lower, seeing declines from 15-30%. Despite the dispersion in price action across crypto assets, the overall tone was bullish, as the tide turned from a series of regulatory actions (culminating in lawsuits against Binance and Coinbase) to a renaissance in institutional Bitcoin ETF filings.
Why did Bitcoin steal the spotlight for June? A few reasons: (1) Bitcoin is the “flight to quality” asset during historical bear markets, (2) BTC has the least
amount of regulatory uncertainty (it is generally accepted that BTC is a commodity), (3) BTC is the gateway into the crypto space for most institutions, and accordingly the focus of major spot ETF contender Blackrock. Not surprisingly, this ETF was for Bitcoin – a filing which catalyzed a sharp rally in BTC from ~$25,000 to north of $30,000.
Why did alt-coins (alt L1s, L2s, DeFi tokens) underperform in June? Namely due to the lawsuits against Binance and Coinbase in early June, which named several prominent alt-coins as securities. While these are simple allegations at this point, several regulated platforms (e.g., Robinhood) proactively de-listed these alts. While BTC became more investable in June due to the flurry of ETF filings and the generally-accepted commodity standard, alt-coins became less investable due to the regulatory overhang, which will likely persist for the foreseeable future while the market awaits clarity from the courts.
So why did Ethereum end the month flat? ETH is, and always has been, in a unique spot from a regulatory, monetary, and institutional perspective. Although the Binance and Coinbase lawsuits named several alts as securities,
ETH was not mentioned. ETH has already been labeled a commodity several times by the CFTC, which has approved the listing of ETH-based futures already. Many argue that ETH is now “sufficiently decentralized.” As a result, the regulatory outlook for ETH is brighter than that of alt-coins, although arguably not as clear as for Bitcoin.
However, Ethereum has an economy of activity built onto its network. Ethereum has a monetary policy that, post-Merge, has resulted in much lower inflation than even Bitcoin. The Ethereum protocol has a staking yield, and yield is a value-add offering for institutions. ETH is a diversified asset that complements BTC as part of a portfolio. And lastly, the Ethereum network is green; Proof of Stake consumes less power than Proof of Work. Therefore, while the outlook for ETH is wait-and-see, the Ethereum network grows stronger daily and has retained its value against BTC much better than alt-coins.
Let’s examine the state of Ethereum as we close out Q2 2023. It was an eventful quarter, the highlight of which was ETH staking withdrawals going live after ~16mm staked ETH had been locked since December 2020. We will examine the state of ETH staking and end with an economic snapshot of Ethereum.
Purpose
This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.
Analyst Certification
Vivek Raman, denoted by an “AC” on the cover of this report hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.
Conflicts of Interest
This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.
General Disclosures
Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or throughhttp://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such.BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.
The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.
Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.
BitOoda Technologies, LLC is a member of FINRA.
“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.
Copyright 2023 BitOoda Holdings, Inc. All rights reserved. No part of this material may be reprinted, redistributed, or sold without prior written consent of BitOoda.
In this report, we offer a variety of institutional frameworks to analyze ETH, alongside BTC, as a part of a diversified crypto portfolio. Bitcoin has transcended into the mainstream, accelerated by the acceptance of spot BTC ETFs. ETH, while more complex, has unique use cases that could position it as a premier crypto asset alongside BTC.