Bernstein Doubles Down on $150K Bitcoin Call

Plus, Ethereum turns inflationary and the SEC goes after Robinhood

By: Zack Guzman

May 6, 2024

This Week In Crypto… Bitcoin is bouncing back as all 11 ETFs enjoy inflows for the first time ever, prompting Bernstein analysts to double-down on $150K BTC. Plus, the SEC comes after Robinhood for its crypto trading business and Ethereum inflation rears its ugly head.

Bitcoin Battles Back

After dipping below $60,000 this weekend, Bitcoin bounced back in a big way to kick off the week. Some might say the crypto caught a boost by a weaker-than-expected jobs report on Friday (which had some traders boosting odds of a rate cut by the Fed) but that might overlook one key element of the bottoming process.

As Bloomberg’s Eric Balchunas pointed out, Friday marked the first time all 11 Bitcoin ETFs notched net inflows. (Yes, that even included Grayscale, which had seen an incredible stretch of nearly 80 days of consecutive outflows.) That is to say, the ETF investors held in despite the selloff, and arguably demonstrated they aren’t likely to be easily shaken.

Off of that, analysts at Bernstein doubled down on their $150,000 price call, saying the bounce back to inflows for the ETFs marked a key turning point.

"We feel even better about that call and metrics indicate a healthy cycle, still in its early stages," Gautam Chhugani and Mahika Sapra noted. "Risk-reward here remains attractive."

Coinbase & Block Are Still Cranking

Coinbase delivered a strong first quarter, with revenue of $1.6 billion – a 72% increase quarter on quarter. Perhaps more importantly, CEO Brian Armstrong also gave a special nod to Base, the company’s layer-2. As more people build on Base, the company has seen sequencer fees grow.

As Armstrong noted, over the prior 30 days, Base has processed more transactions than any other layer-2 network, and handled more than double the number of transactions processed by the Ethereum blockchain itself. That amounted to Base revenues leading growth in Coinbase’s “other transaction revenue” category, which came in at $56 million for the quarter.

Block, for its part, also delivered a banger of a quarter to boast a 22% jump in gross profit over a one year period to $2.09 billion. Perhaps more interestingly, the company also said it’d be re-investing 10% of its bitcoin related profits into buying bitcoin – and even published a “Bitcoin Blueprint For Corporate Balance Sheets,” to help other companies do the same.

Ethereum Inflation Returns

As Ethereum layer-2 networks like Base continue to attract builders, gas fees on Ethereum have tanked. In fact, for the first time in a year, Ethereum has actually returned to being inflationary.

After the London hard fork, Ethereum was upgraded to burn ether via gas fees spent on transactions. But as layer-2 networks work to alleviate congestion, fees on Ethereum have dropped considerably. So much so that last week, Ethereum’s supply actually flipped back to being inflationary, with a supply growth rate of 0.49%.

(Source: The Block)
(Source: The Block)

SEC Hits Robinhood

The SEC continued its war path on seemingly any company that offers an on-ramp into crypto by hitting Robinhood with a Wells Notice Monday. A Wells Notice serves as a notice that action is coming, but does not necessarily mean that recipients have violated any law.

For its part, Robinhood issued a fiery response which mentioned the company had purposefully steered clear of staking and lending products that the SEC had previously said were off limits, and that they were prepared for a battle.

“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business,” Dan Gallagher, Chief Legal, Compliance and Corporate Affairs Officer wrote in a post. “We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”

HOOD shares dipped as much as 2% in morning trading before paring losses (perhaps again demonstrating that crypto companies are almost prepared to face a Wells Notice at any moment.)

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