June Outlook: Don't bet against Fink

As we enter the summer, positive and negative catalysts are upon us. The ghost of Mt. Gox looms over BTC, whereas Fink’s Midas touch on ETH creates a setup ripe for relative ETH strength throughout the summer.
Outlook Cover (4)
Ether ETFs are coming. That’s a fact, it’s a thing we can’t deny. We are a small mountain of paperwork and back and forth between issuers and the SEC away from the launch, with launch date expectations ranging from late June to early July. We anticipate that these ETFs will attract $4bn worth of net inflows in their first five months, roughly equivalent to 0.75% of ETH’s circulating supply. As seen in BTC, this monumental supply absorption shock should lead to price appreciation in ETH.
Mt. Gox redistributions are coming. That’s a fact, it’s a thing we can’t deny. The ultimate repayment deadline is set for October 31. Still, early fiat repayments and several developments with BTC and BCH indicate that the Gox supply is due to be distributed well before Halloween. 141,686 BTC and 142,846 BCH will soon be made available to Mt. Gox creditors who have been locked up in a 10 year long bankruptcy process. Recipients range from long term holders to hedge funds, and far from all funds will be sold. Nevertheless, a conservative estimate of 30% of assets being sold will lead to excess sell-side pressure of 42,505 BTC, or $2.9bn upon distribution. That’s 8,500 more BTC worth of sell-side pressure than the net outflows of 34,000 BTC seen in BTC ETPs from April 12 to May 1, which accompanied BTC’s -20% grind lower from $70k to $56k.
A brief summer storm
If you are a long-term investor, you may rightfully close your eyes on the Gox estate distributions, as the event is due to shape up as a swift summer storm in an otherwise sunny market. Harmony will prevail. Eventually, Mt. Gox’s sell-side pressure could be offset by buying pressure stemming from FTX estate distributions. Apart from estates, the tight macro environment shows signs of loosening, a net positive for bitcoin. Politically, tailwinds are upon us. Trump’s courting of crypto voters has been met with Dems backing off. An anti-crypto stance is not strategically aligned with altering Biden’s young voter problem. Structurally, institutions are moving slowly—net inflows of $14bn to BTC ETFs are far from the peak. Pension funds, endowments, RIAs, and their brethren are still on the fence; flows will commence. These factors solidify our very constructive market outlook for the next 6-12 months, while Gox repayments represent a convenient speed bump for underexposed holders and a dip worth bidding on.
The Anatomy of ETHBTC
Estimated inflows of $4bn to ETH and ~$3bn of sell-side pressure in BTC favor ETHBTC strength over the summer. The pair has bled on a linear downtrend in the past two years, but ETH’s imminent positive catalyst and BTC’s corresponding negative catalyst reek of a breakout. Periods of ETH outperformance tend to be short-lived but very strong. ETH saw virtually all its 2021 outperformance versus BTC occur in a seven-week span from late March to mid-May. The attractive ETH setup favors summer strength, and with the current ETHBTC ratio sitting at 0.054, I am comfortably overweight in ETH.
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