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Marching Momentum: BTC, ETH, SOL

The Digital Investor

Take Away

Bitcoin is on the brink of its halving event, amidst a surge in institutional demand, poised to catalyze significant market movements. Meanwhile, Ethereum is making steady strides towards scalability through its bustling activity on Layer 2 solutions, guided by its rollup-centric roadmap (Dencun upgrade). This pivotal enhancement is essential for Ethereum’s long-term viability and wider adoption. Additionally, Solana has carved out a niche for itself, buoyed by the rising popularity of meme coins and the DeFi sector. Its low transaction costs and user-friendly interface have solidified its position as a favored choice among users, driving heightened activity. 

Together, these three cryptocurrencies are at the forefront of the market’s evolution, leading the charge into 2024 with robust developments and growing adoption. Their combined technological advancements, increasing institutional interest, and strategic upgrades signal a vibrant future for the crypto space. 

Additionally, the fresh institutional money flowing into the crypto space via Bitcoin ETF and the expectations of soon-to-be ETFs on Ethereum and Solana support these prices.


Towards a more pronounced demand/supply disequilibrium 

Bitcoin’s price trajectory has undoubtedly been up in the last two quarters. Since early Q4 2023, Bitcoin’s price more than doubled as expectations of a US ETF launch supported it. In January this year, the first US ETF was launched, and fresh money flew into these investment products, pushing Bitcoin’s price to a new all-time high above USD 73,000 on 14 March. 

Since this historical date, Bitcoin’s price has fluctuated but remained solid, standing at USD 66,000 at the time of writing. When is the next leg up to the widely anticipated USD 100,000 mark? 

We think two factors will define the date. 

The first factor is the highly anticipated Bitcoin Halving, which will happen this month (read our Bitcoin Halving—What you need to know if you are not familiar with it). The halving, which slashes the reward for mining new blocks in half, traditionally acts as a significant price catalyst, underscoring the scarcity and increasing the perceived value of Bitcoin. 

Halving impacts the supply of newly issued Bitcoins. With each halving, the issuance of new bitcoins is divided by two, making them scarcer. 

The second factor is institutional demand, as captured by massive inflows in the US Bitcoin ETF, which bring new money to this asset class.  

Both of these factors are measurable. The net demand of BTC is our aggregated statistics that count the number of Bitcoins held by ETF minus those newly issued. Chart 1 shows a strong correlation between net demand and the price of Bitcoin. 

Since the inception of Bitcoin ETFs, these financial products have amassed approximately 214,000 bitcoins, a figure that significantly overshadows the 75,000 BTC introduced into circulation through block rewards during the same period. This discrepancy indicates that Bitcoin ETFs are accumulating nearly three times the amount of Bitcoin’s new supply, underscoring a substantial demand far exceeding the fresh influx of coins into the market.

With the upcoming halving event, slated for the block height of 840,000 on 20 April, the rate at which new Bitcoins are generated will halve, further exacerbating the gap between the limited new supply and the robust demand from ETFs. 

This reduction in supply, juxtaposed with burgeoning institutional interest and investment, sets a fertile ground for a bullish market trajectory. The impending halving serves as a pivotal moment, likely to amplify the existing tension between supply and demand and catalyze a market ripe for new highs. 

The launch of new Bitcoin ETFs, such as Hashdex’s on the New York Stock Exchange and the anticipated spot Bitcoin ETF by Hong Kong-based asset manager VSFG, further cements Bitcoin’s appeal to a broader range of investors and highlights its increasing mainstream acceptance. 


Dencun Upgrade: A Major Leap Toward Efficiency and Sustainability 

In the blockchain world, upgrades are pivotal moments that redefine the landscape, and Ethereum’s Dencun upgrade, live on 13 March, is no exception. Designed to usher in a new era for Ethereum, it brings significant enhancements to Layer-2 solutions and staking pools, potentially impacting Ethereum’s monetary policy. 

At its core, the Dencun upgrade introduces innovative data storage capacities to slash the fee costs associated with Ethereum’s Layer-2 scaling solutions. 

Layer 2s, particularly roll-ups like Arbitrum and Optimism, have become crucial for Ethereum, handling up to 150k and 100k daily active addresses, respectively. They execute transactions externally and anchor them back to Ethereum’s blockchain in aggregated batches. However, until now, their costs were tied to the mainchain’s fluctuating fees, which could soar to $30 during peak times.  

Post-Dencun, these costs have significantly decreased, thanks to the introduction of blob transactions that optimize data storage and reduce reliance on the execution layer.

Another significant facet of the Dencun upgrade is its impact on Ethereum’s staking dynamics. Implementing a fixed limit on validator entries aims to streamline the growth of the validator set, enhancing network communication and stability. This limit is designed to manage the balance between network expansion and efficiency, addressing the bottlenecks observed with the previous churn limit mechanism. 

From a monetary perspective, these changes are monumental. The adjustment in validator entries directly affects Ether’s new issuance rate, potentially slowing down the the inflation rate. Coupled with a mechanism for more efficient transaction processing, the upgrade could lead to a net decrease in Ethereum’s circulating supply, a factor that has already been observed post-Merge with a reduction of 410k ETH.  

Looking ahead, the Dencun upgrade aligns with Ethereum’s roll-up-centric roadmap. It aims to boost user experience and network scalability without compromising security or decentralization. Its success could herald a new chapter in Ethereum’s journey, showcasing a commitment to innovation and sustainability.  

The Dencun upgrade is a testament to Ethereum’s evolving ecosystem. Addressing critical issues around scalability, efficiency, and monetary policy sets a new benchmark for the network’s future. As Ethereum continues to adapt and grow, the Dencun upgrade is a pivotal milestone, promising a more efficient, sustainable blockchain for users and developers alike. 


The Rising Star of the Crypto World 

Solana resilience and capacity to bounce back is a testament to Solana’s robustness and the community’s trust in its technology. Notwithstanding a hacking incident in 2021 that resulted in a loss of over $320 million, its Wormhole Bridge managed to secure a whopping $225 million in funding shortly. 

Moreover, the Solana Foundation’s foray into experimenting with permissioned environments on its Pyth Network indicates a strategic move towards broadening its utility and appeal. This move, coupled with the initial wave of meme coins mania sparked by the Bonk token and its airdrop to Saga phone holders, highlights Solana’s expanding influence and ability to drive user adoption and enthusiasm. 

On the institutional front, significant endorsements have come from Circle’s issuance of its Euro stablecoin on the Solana blockchain and Paxos’ green light from New York regulators to issue its assets on Solana. Despite its past challenges with congestion and outages, these developments suggest a growing institutional interest in Solana as a viable alternative to Ethereum. 

However, the speculation around a possible Solana ETF, stirred by tweets from asset manager Franklin Templeton, has been tempered by analysts’ skepticism given the current regulatory scrutiny Solana faces from the SEC. Yet, the underlying strength of Solana, demonstrated through new token standards designed for institutional adoption and the continuous bullish sentiment from major financial institutions like Franklin Templeton, suggests a strong foundation for future growth. 

The adoption curve of Solana has been remarkable, with on-chain analysis revealing a spike in users and transactions coinciding with the meme coin hype. The Phantom wallet’s exponential increase in downloads and Solana’s overtaking Ethereum in DEX trading volume underscore the platform’s growing dominance and potential for consumer application dominance despite competition from other blockchains like Ethereum.

However, Solana’s path has its challenges. Regulatory hurdles, reliability issues highlighted by past outages, and sustainability concerns regarding its staking rewards system pose significant obstacles. Yet, the Solana Foundation’s proactive approach, through upgrades and a focus on building a mature ecosystem, suggests a roadmap to address these challenges and harness institutional support to solidify its place in the crypto landscape.  

As Solana continues to navigate through these developments and potential milestones, the question remains whether but when it will achieve the breakout many anticipate. With its blend of technological innovation, growing institutional support, and a vibrant community, Solana stands at the forefront of the next wave of crypto adoption and innovation, promising an exciting future for its holders and the broader crypto ecosystem.


The landscape for Bitcoin, Ethereum, and Solana paints a promising picture as we advance into 2024. 

Bitcoin’s impending halving, coupled with rising institutional demand, sets the stage for noteworthy market shifts. Ethereum’s focus on scalability through its rollup-centric roadmap marks a critical stride towards broader adoption. Meanwhile, Solana’s niche in meme coins and DeFi, alongside its low transaction costs and user-friendly interface, positions it favourably among users.

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Yves Longchamp

Head of Research AMINA Bank AG

Sonali Gupta

Senior Research Analyst AMINA India

Anirudh Shreevatsa

Research Analyst AMINA India

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