Bernstein said in a Monday research report that the collapse of FTX was the catalyst for a new bullish cycle in the cryptocurrency markets.
According to the Report, the demise of the cryptocurrency exchange eliminated the final tranche of “toxic crypto leverage”. It taught digital-asset investors the significance of decentralization and self-custody wallets.
Bitcoin (BTC) is the world’s largest cryptocurrency by market capitalization, and macro catalysts align in its favor. Continued weakness in U.S. regional banks, deposit outflows toward money-market funds, and the four largest U.S. banks reflect concerns about the “centralization of money.”
Analysts Gautam Chhugani and Manas Agrawal wrote, “Any potential dislocation, whether on the bank’s credit side or the sovereign side, positions bitcoin perfectly as a safe-haven asset alongside gold.”
Bitcoin has risen 80% this year, with prices increasing 23% in March due to multiple U.S. bank failures. The native token of Ethereum, Ether (ETH), is up 76% year-to-date, according to data from CoinDesk.
Last week, Ethereum implemented the highly anticipated Shapella hard fork, allowing users to stake and unstake Ether at will. Following the software update, Ether climbed 13%, boosting the market as a whole.
The note stated that the tripling of Ethereum blockchain fees “reflects the growing user intensity and token prices post FTX.”
Bernstein claims the new crypto cycle is underappreciated due to positive factors. These include macro catalysts, a new bitcoin mining cycle, Ethereum blockchain upgrades’ sustained success, and scaling products such as Arbitrum for Ethereum.