Crypto venture capitalist Travis Kling offered a detailed analysis on Bitcoin‘s BTC/USD underperformance relative to macro conditions and the ongoing struggles of Ethereum ETH/USD before its ETF trading launch.

What Happened: Kling pointed out that Bitcoin is currently trading ~10% below its all-time highs (ATHs) and was relatively flat despite favorable macroeconomic conditions. This performance contrasted with the NASDAQ, which surged 16% since mid-April.

#Bitcoin is ~10% off of ATHs and the timeline appears to be on the verge of cannibalism.

Couple thoughts. NFA –

— Travis Kling (@Travis_Kling) June 18, 2024

The Macro Context

While the NASDAQ was 8% above its prior ATH from March, Bitcoin remained sluggish. Kling wondered, “BTC could go up ~30% from here just to catch up. Why is it lagging?”

Bitcoin's lackluster performance was notable considering the strong ETF inflows starting from May 13, amounting to $4 billion over 19 days, though Bitcoin only saw a 17% increase over this period.

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ETF Dynamics and Market Behavior

Kling remarked on the recent ETF outflows, with Bitcoin experiencing a 7% drop over six consecutive days of outflows totaling $750 million. He noted ETFs bring significant arbitrage flows, making daily ETF flows less reliable indicators of overall trends. “There’s just a lot of other stuff going on under the hood,” he said, hinting at the complexity of the market.

Kling speculated the U.S. government might be selling Silk Road Bitcoin, contributing to the crypto's "unnaturally heavy" trading. Additionally, the Ethereum ETF reversal saw significant repositioning from Bitcoin to Ethereum, impacting Bitcoin’s performance.

Ethereum and Altcoin Landscape

Kling discussed the potential effects of Ethereum ETF inflows, predicting that if strong, Ethereum would likely see significant gains.

Ethereum remained 30% below ATH and its performance has been tepid despite ETF progress. The broader altcoin market is struggling, down 32% from highs, plagued by supply overhangs and a lack of compelling narratives or catalysts.

“Memecoins have been trading even worse than Alts,” Kling lamented, noting the absence of breakout use cases like DeFi, NFTs or gaming.

What’s Next

Kling concluded that while Bitcoin may head higher this year and Ethereum could perform well depending on ETF inflows, the gap between these major coins and altcoins was likely widening.

For altcoins to recover meaningfully, the market needs a strong, compelling narrative to attract real inflows.

These topics are expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: DUSAN ZIDAR on Shutterstock