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⏰ Wen ETH szn?

It’s hard being ETH right now. 

It’s struggling to keep up against bitcoin — ETH is down 33% over the past year when compared to BTC — and it’s lagging behind the market over the past year too.

If you were to just boil ETH down to its ETFs, you’d see an incredibly different tale from the bitcoin ETFs, which not only kicked off the year but quickly smashed records. Ether ETFs, on the other hand, haven’t seen that type of market reception.

(I must caveat here that ETH is very different from BTC in a lot of ways, but for the purpose of the ETF talk, I needed to simplify the two.)

With ETH continuing to struggle, the question on my mind is simple: Where do we go from here?

K33 analyst David Zimmerman told me that he thinks ETH needs to see more positive inflows from the ETFs to kick it up a notch. 

“This is not necessarily to say that institutional buying will drive up price alone, but rather that this would be necessary to shift ETH sentiment. ETF flows are now the major focus for ETH. ETH ETFs haven’t yet enjoyed the major inflows that BTC ETFs saw (even in relative terms). In my eyes, ETH is an institutional asset now, and the big guns need to show interest first if retail is to hop on board,” Zimmerman said.

Jordi Alexander, who joined the Empire podcast for an episode this week, laid out his bull and bear case for ETH. 

“Ethereum is the place where it can be unleashed into DeFi and lending and all this stuff. And instead of focusing on its own monetary properties, it could try to get Bitcoin bridged in and then just use that you know, trillion of value to to unleash it. I do think that ETH has a chance at some monetary premium, though, and I think that Western countries that are more woke, environmentally friendly, they don't want the mining,” he told Empire’s Jason Yanowitz.

“You remember, [Elon Musk] just dumped all his bitcoin because of the mining stuff… So, there could be a large contingent that wants Ethereum to be like a safer, cleaner form of digital native money. So that's the bull case, and maybe it happens.”

The bear case, he added, is “just more dispersion.”

Speaking of bears, the sentiment on Crypto Twitter, as Yanowitz pointed out in Empire, is that Solana’s eating “ETH’s lunch.” 

“I think that has been the story of this market for a while and I expect it to continue,” Zimmerman said. 

“SOL has managed to solidify its place in crypto. I isolate ETH as an institutional asset in its own category, while I consider Solana the leading L1 from ‘the rest of the pack.’ I no longer really think in terms of ‘ETH killers’ or ‘ETH competitors.’ If anything, I am more focused on SOL competitors that can steal attention away from SOL, as SUI has done recently. If bullish momentum continues through Q4, I expect SUI to continue doing well, while the market will likely also rotate through to other L1 coins such as APT,” he continued.

SOL, SUI and APT are expected to outperform ETH in a bullish environment, but Zimmerman was careful to add that he still believes ETH can be a good allocation for some folks. 

“Holding it comes with less risk than the rest, and chasing rotations through different L1s can also be tricky and stressful.”

But one comment from Alexander stuck with me. What should Vitalik Buterin’s role be? 

Alexander suggested that ETH’s code needs to “speak for itself” which would mean that Buterin should somehow step aside (Alexander has two ideas for him: dissociate or retire). 

Zimmerman, candidly, said he’s not sure what kind of role Buterin should take but he’s not sold on too much distance given that he does provide “real value” with his knowledge and overall technical expertise.

Putting Buterin aside, until we see more inflows to the ETFs, it’s going to be hard to make Zimmerman a bull. 

Sorry folks, no ETH szn just yet.

— Katherine Ross

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• Ether’s up 1% over the past day, sitting around $2,635.

• Bitcoin hasn’t seen the same gains, up slightly to $63,763. 

• EigenLayer’s EIGEN unlocked last night, trading around $3.82 as of Tuesday morning. It debuted at $6.51B FDV, per CoinDesk.

• Popcat, Fantom and Bonk lead the top gainers this morning, while TIA, JASMY and WLD are all in the red. 

• Total stablecoin value is down over 2.2% to $171 billion over the last 30 days, though stablecoins notched an all-time high in August, per data from rwa.xyz.

ETFs have been a key catalyst for digital assets this year. 

BlackRock iShares manages ~$3.3T globally across their range of ETF products, and CIO Samara Cohen will be at Permissionless to share her views on the growing nexus of the digital asset class and ETFs.

❓ (Attempting to) answer the Q4 Q’s

If you’ve been a subscriber for a while, you’ll remember Casey Wagner from our early Empire days. Enjoy this crossover piece from one of our fellow Blockworks newsletters, Forward Guidance!

We’ve made it to the final quarter of 2024. With the rate cutting cycle underway, the election looming and geopolitical tensions rising, the next three months will be busy.

Here’s an overview of where economic forecasts currently stand and what history can tell us about what to expect as we head into the end of the year: 

Recessionary fears are still present, but generally not increasing 

Analysts from S&P Global are keeping their probability for a recession beginning in the next 12 months unchanged at 25%. 

“For now, near-term recession fears appear overblown,” they wrote, adding that the recent increase in unemployment is largely due to labor force expansion rather than layoffs, which would be more indicative of a looming recession. 

Analysts from Russell Investments mostly agree, adding that declining inflation, modest wage growth and cooling labor market pressures all bode well for avoiding a recession.

A 90s-style soft landing 

90s fashion is back — according to Gen Z at least — so let’s hope the economic conditions that allowed for a soft landing in 1995 are also making a comeback. 

The Fed’s 1994 rate-raising cycle saw rates go from 3% to 6% over seven increases. The central bank cut rates by 75 basis points the following year and held them there for over a year. Economic growth did slow, but the US didn’t dip into recession territory. The S&P 500 ended 1995 34% higher. 

The end-of-year crypto outlook 

BTC and ETH are currently around 44% and 13% higher, respectively, year to date. The gains were largely made in the first quarter of the year, but some analysts insist there’s room to rally. Bitcoin particularly is looking to close September at about 7% in the green.

“We anticipate a constructive Q4 2024 due to US rate cuts and significant fiscal and monetary stimulus from China, which should enhance market liquidity and support BTC performance,” analysts from Coinbase Institutional wrote in a recent report.

Tom Dunleavy, partner at MV Capital, says risk assets currently have “almost the perfect setup,” citing data that shows that when the Fed cuts rate when stocks are already up, the rally tends to intensify.

— Casey Wagner

• Jesse Pollak, creator of Base, said on X that he will also lead Coinbase’s Wallet team. 

• Two senior Coin Center staff members, including executive director Jerry Brito, are set to depart after a decade at the DC-based advocacy group. 

• The SEC won a summary judgment against Rivetz, having alleged that the crypto firm sold unregistered securities, according to CoinDesk. 

• Robinhood’s European users can now transfer crypto in and out of its app, per CNBC. 

• Metaplanet has bought another 107.91 BTC, per the publicly traded firm’s X account.

Q: Permissionless kicks off in just over a week. What are you most excited about?

While I won’t be in Salt Lake City myself, here’s my list: Bitcoin DeFi, regulation/politics, and a smattering of vibes.

Maybe it’s the last one that interests me the most. Where are the vibes right now? Where does the wind point these days? Crypto often feels like an industry in search of direction. At least here in the US, so much (feels like it) hinges on the upcoming election season — for good or for worse, I don’t know.

Events like Permissionless are good for sticking your thumb in the air for a sense of the direction of things. And even though I won’t be physically present, I’m eager for such answers. 

— Michael McSweeney 

Honestly? The people. The panels are a close second, given the variety of topics that’ll be discussed. 

Of course, I have to hype one of my own panels (yes, I’m biased here). NFTs: The Comeback, which’ll take place on Friday, Oct. 11. 

IMO, NFTs are in a really interesting spot right now given the sudden regulatory interest, but still an overall lackluster appetite. The panel includes Luca Netz of Pudgy Penguins, OpenSea’s Devin Finzer and Blur’s Pacman. It should be an interesting conversation, given the three unique perspectives on stage. 

But the best part of crypto events hands down is getting to interact with folks who are building, innovating and eager to connect. 

If you’re headed to SLC next week, say hi if you see a redhead wandering around the convention center. 

— Katherine Ross