CoinShares’ head of research is extremely bullish on Ethereum

James Butterfill, the head of research at CoinShares, sees a huge bullish scenario for Ethereum and Bitcoin if the US central bank starts cutting interest rates soon.

For Ethereum, the potential returns are even higher, according to Butterfill, because ETFs will soon be launched for it.

Supply Crunch upcoming for Ethereum

It won’t be long before the Ethereum ETFs launch in America and that, in combination with interest rate cuts from the US central bank, could cause a so-called “Supply Crunch” according to Butterfill.

A Supply Crunch occurs when the demand for a financial asset is significantly higher than the supply at current prices. In theory, this should cause a gigantic price explosion.

“If you look at the futures market, you see that the first interest rate cut will probably not come until December. I think the first interest rate cut will come later than expected, but it will also be larger than expected.

That would be very bullish for an asset like Bitcoin, which is very sensitive to interest rate expectations.

But this may be even more interesting for Ethereum. The amount of Ethereum in circulation is quite low due to the people who staked the coin. The new Ethereum ETFs cannot be discontinued when they launch in July, so a so-called Supply Squeeze may occur there.

That could lead to a gigantic price explosion for Ethereum,” Butterfill said in conversation with Scott Melker of The Wolf of All Streets podcast.

$450 billion in capital

Ultimately, Butterfill foresees an influx of $450 billion of capital into the Bitcoin and Ethereum ETFs over the long term. In theory, this should cause gigantic price explosions.

For the time being, however, these have not materialized and the bull run is on hold. This all seems to be the result of the uncertain macroeconomic environment. Inflation continues to linger in the United States, which means that the US central bank cannot yet lower interest rates.

In that respect, we must hope for a weakening in the US economy and labor market, so that the pressure behind inflation disappears and the path to rapid interest rate cuts opens up.

Until then, it seems to be a matter of being patient and waiting patiently for the second part of Bitcoin’s bull run.

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