In this week's episode of Yahoo Finance Future Focus, our host Brian McGleenon engages in a discussion with Zodia Markets CEO Usman Ahmad, focusing on the shifting market sentiment towards ethereum as investors anticipate the potential inclusion of ether in a spot exchange-traded fund (ETF). Ahmad highlights the market's initial focus on the approval of spot bitcoin ETFs, preceding ethereum's emergence as a frontrunner for the next ETF approval. The Zodia Markets CEO also discusses the recent approval of spot bitcoin ETFs and the subsequent sell-off, expressing confidence in long-term stabilization and positive trends for bitcoin's price action. Additionally, the conversation delves into the macroeconomic perspective, with the Zodia Markets CEO addressing the possibility of a rate pause and its potential impact on investor confidence in capital allocation strategies, particularly for risk assets like bitcoin.
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00:00 Hello, and welcome to this week's episode of Yahoo Finance Future Focus.
00:09 Now, today we're joined by CEO and founder of Zodiac Markets, Usman Ahmed.
00:13 And we're going to be speaking about the impact that multiple spot Bitcoin ETFs could have
00:19 on the cryptocurrency market.
00:20 Usman, welcome to the show.
00:22 Thank you, Ryan.
00:23 Great to be here.
00:24 It's great to see you.
00:25 So, last year, the spot Bitcoin ETFs were approved.
00:30 The market kind of played out.
00:31 We saw a lot of volume on the first day.
00:34 Then it kind of tapered off.
00:35 What are your projections?
00:37 What's your prognosis for Bitcoin in the short term and in the long term?
00:41 Well, I mean, obviously, the approval of the spot Bitcoin ETF was, I suppose, long anticipated.
00:47 So what we saw in the aftermath of the approval was not only kind of the excitement and almost
00:54 relief of the approval, we saw the volume, as you indicated, flowing in.
00:59 That's pretty normal in an asset class being approved.
01:01 So an influx of volume initially and then tapering off, because ultimately, the Bitcoin
01:07 needs to be seeded as part of the ETF.
01:09 But the interesting thing that many observers thought it would be an accelerant to the price,
01:16 actually, what we saw was more of a sell-off in the price.
01:20 So volumes have increased, but the price came off, almost the classic buy the rumor, sell
01:26 the fact type approach.
01:29 But what I think we'll see over the medium to longer term is a stabilization and long-term
01:35 positive tailwinds for Bitcoin price action and volume activity going forward.
01:40 Okay.
01:41 So we talked about Bitcoin and, of course, there's other major digital assets like ETH.
01:46 Now, ETH has been outperforming Bitcoin since the SEC approved spot Bitcoin ETFs.
01:51 Why do we see this dynamic?
01:52 It touches upon my previous point, actually, where I think the market priced in an approval.
01:58 We've almost been anticipating it for quite some time.
02:02 And the fact that there were 11 approved, all on the same day, was a huge flip for the
02:06 Bitcoin market.
02:07 Actually, I think as soon as that happened, the market or market sentiment started looking
02:12 at Ethereum as the next obvious asset that would potentially be wrapped in that ETF type
02:19 wrapper.
02:20 So, I think we saw probably somewhere in the ballpark of a 10% to 12% price increase of
02:24 Ethereum in the days following the Bitcoin approval, which for me, certainly, and for
02:30 us in the industry, is a clear indicator that that's probably where we're looking next for
02:35 an ETF to be approved.
02:37 Okay.
02:38 So, in the medium term, do we still see ETH outperforming Bitcoin?
02:42 It's difficult to say, because I think what we've seen is essentially with the ETF approval,
02:47 there's potentially more demand and more – with a legitimate wrapper, shall we say, that's
02:53 now accessible to the mass market in the U.S. in particular.
02:56 They can start putting Bitcoin ETFs in their retirement funds.
03:00 I think we'll see an uptick in interest and buying demand as a result.
03:04 So, I see Bitcoin performing and continuing to increase in price.
03:08 But I think people are now going to be looking at ETH and going, is that next?
03:13 And if so, when?
03:16 And potentially, the likes of BlackRock and others, it's not just one ETF that they tend
03:20 to look at.
03:21 They tend to look at a lot.
03:22 So, maybe there's a spot ETF and maybe in the future, we're going to have baskets of
03:29 more underlying assets.
03:30 So, we'll see how that plays out.
03:31 But I don't think it's a bad thing to look at the fact that people have now pivoted to
03:37 the markets, now pivoted to look at ETH as a potentially increasing asset as well.
03:41 We're kind of looking at the high possibility of a rate pause at the end of January.
03:46 What kind of catalyst will that have for the Bitcoin market and crypto in general?
03:50 Well, I think generally for the market more broadly.
03:52 So, if we zoom out even further from a macro perspective beyond just digital assets, a
03:59 rate pause or a stabilization of rates, whether we're done on rate rises or not, I'm not
04:04 sure, but a pause at least, gives a degree of confidence.
04:08 It potentially allows for people to plan a little bit further in their capital allocation
04:15 strategy and look at how they're going to utilize the capital they have.
04:19 We've got to remember, we've had a really rapid, relatively speaking, very rapid increase
04:24 in rates over a very short period of time.
04:27 And that's come off the back of 15 years of zero interest rates.
04:30 So, the market has had to readjust and has readjusted.
04:34 And we're now seeing – well, we'll see, but a high likelihood of a pause means a little
04:39 bit more stability and for risk assets, of which I think Bitcoin and digital assets are,
04:45 there's potentially more confidence in the ability to allocate into those asset classes.
04:50 Uzman Ahmed, thank you very much for coming on this week's episode of Yahoo Finance Future
04:54 Focus.
04:55 Absolute pleasure.
04:56 Thank you for having me.
04:56 (upbeat music)
04:59 (chimes)