Dear Subscriber,

By Marija Matic

The crypto market is gearing up for a potential midsummer melee this July.  

So far this bull cycle, Bitcoin’s (BTC, “A”) dominance over the broad market has been steadily growing. This means its market cap has outperformed the combined market cap of all other cryptocurrencies.

But there are two events on the horizon that could shake things up. Indeed, they could shift the board enough for Ethereum (ETH, “A-”) to take the leading role in the market. 

And that potential is throwing a wrench in some investors’ strategies. They are now wondering, “Should I rotate my BTC into ETH?”

Before we can answer that, we’ll need to break down the catalysts that could shine a light on Ethereum.

Event No. 1: Mt. Gox Ghosts Return

It may feel like ancient history, but the ghost of Mt. Gox continues to haunt the crypto market.

Back in 2014, the infamous Mt. Gox hack saw a staggering 850,000 BTC vanish from the Mt. Gox exchange. Not only did that send seismic quakes through the market at the time, there have been several aftershocks since.

And the next is potentially starting to rumble ... 

After years of legal wrangling, over 140,000 of those stolen BTC will finally be returned to victims, starting this week. This translates to a whopping $9 billion windfall. 

While it’s good to see reparations made to those who got caught in the crossfire, there is a potential downside. Namely, some analysts fear it could trigger a sell-off, potentially driving down the price of Bitcoin.

But I don’t believe the impact will be quite so dramatic for three reasons:

1. Slow and Steady Wins the Race: The repayments are expected to be distributed over several months, starting this week and ending in October. This will help mitigate the downward pressure on the price.
    

2. Diamond Hands Don't Fold: While lots of claims were bought by speculative third-party funds that will likely be the main sellers, it’s worth remembering that many Mt. Gox victims are early Bitcoin adopters.

   These "HODLers" — investors known for holding long term — are unlikely to sell immediately, especially as many are already financially secure.

3. Trading Volume Matters: Bitcoin's trading volume fluctuates significantly, between $10 billion and $60 billion per day. But Mt. Gox claimants will try to target high-volume days to sell their Bitcoin, with enough depth to absorb their claim amounts. Additionally, the repayments are spread out, with daily exchange inflows of Mt. Gox funds unlikely to exceed $500 million.

   This means the market should be able to absorb this influx without causing major or long-term price swings.

However, the forces of fear, uncertainty and doubt remain a factor. 

Even though the Mt. Gox repayments themselves might not significantly impact Bitcoin’s price beyond occasional dips, the potential for negative sentiment from influencers with short positions shouldn't be ignored this summer. 

Event No. 2: The Ethereum ETF Extravaganza

The first Ethereum spot ETF would make it easier for people to invest in ETH, just as the Bitcoin spot ETF did for BTC, And it is expected to launch next week, around July 8. 

This could significantly increase demand for ETH, potentially causing its price to surge. Bulls are hoping for a wave of investment, mirroring the trend seen with Bitcoin ETFs.

Put together, these two events have the potential to  flip the  situation, putting Ethereum in the driver’s seat and forcing Bitcoin to follow. 

And that’s why investors are asking themselves one key question: Should I rotate my investment funds from BTC to ETH? 

Look, both ETH and BTC are likely to do well in the next bull market rally. Usually, ETH tends to outperform BTC during altcoin season — which should still be ahead of us. However, it has underperformed so far this cycle, and past performance is no guarantee of future success. 

So the answer is up to each of us to decide for ourselves. 

Regardless of what you choose, this summer can be full of opportunities to better your position in either BTC or ETH. In fact, here are four strategies you may want to consider:

1. Bitcoin on sale: A significant Mt. Gox-related sell-off is a low probability event. But if it were to occur, it could present a golden opportunity for you to load up on Bitcoin at a discount in anticipation of the next bull run.
    

2. Riding the Ethereum ETF wave: Keep an eye on the initial investment flows into the Ethereum ETFs when they launch.

   Significant inflows, especially if they surpass analyst predictions, could signal a prime opportunity to invest in ETH or rotate your BTC holdings to capitalize on the rising Ethereum tide.

   I expect to see more predictions emerge in the coming days, likely ranging from 10% to 30% of Bitcoin ETF inflows. This will help establish clearer benchmarks for a bullish scenario with the Ethereum ETF flow.

3. Expanding to ETH-related plays: The ETF narrative will likely affect more than just Ethereum — Ethereum-related coins that have been on the market for a long time; many have proven use cases and large customer bases. These coins might benefit from the ETF approval as well. After all, a boost to the network they’re built on could be a boost for them, too.

   For example, I will be looking at charts of Maker (MKR, “B”), Ethereum Name Service (ENS, Not Yet Rated), Uniswap (UNI, “B+”), Lido DAO (LDO, Not Yet Rated) and other related plays, for potential opportunities.

4. Rotate to ETH after the breakout: A potential breakout above 0.061 satoshi on the ETH/BTC chart — which you can easily find on TradingView by searching "ETHBTC" — could be a strong indicator to shift funds.

   The chart suggests a seven-year trend will near a breakout point soon, with the upper yellow line acting as a key resistance level at 0.061:

Click here to see full-sized image.

Though, I’ll note, I personally would prefer a green July to rotate the funds. 

But no matter which strategy you choose or if you keep your portfolio exactly as it is, one thing's for sure: Q3 is shaping up to be an exciting quarter for the crypto world. 

Keep your eyes peeled on both Bitcoin and Ethereum to see which comes out on top after this summer!

Best,

Marija Matić