Despite the short-term bearish sentiment, the structural adoption cycle remains intact and cryptocurrencies will become a major “Trump trade” if electoral sentiment shifts more toward the Republican Party, according to analysts at research and brokerage firm Bernstein.
“After a few months Bitcoin BTC
-4.61%
ETF euphoria, markets suddenly feel bearish,” Gautam Chhugani and Mahika Sapra wrote in a note to clients on Monday. Analysts have cited two main arguments related to the recent outflow of funds from spot Bitcoin exchanges and a potentially disappointing spot outlook. Ethereum 
ETH
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ETF launch.
According to analysts, spot Bitcoin ETFs have been quite successful overall, generating a total of more than $14 billion in net inflows since their launch in January. This was the main catalyst for Bitcoin’s 75% rise in the first quarter. But the fund has now seen six consecutive days of daily net outflows of more than $100 million, reaching nearly $1 billion.
Some of the Bitcoin ETF inflows were driven by basis trading between CME futures and the spot Bitcoin ETF, suggesting that real demand-driven inflows may be much smaller. But analysts have argued that “adoption is adoption,” and regardless of the rationale, it has contributed to increased liquidity for ETFs.
“There may be a temporary disruption before large private banking platforms whitelist Bitcoin ETFs. “This is a true game-changer for portfolio allocation to Bitcoin, beyond just basic trading,” he added. “We expect these approvals to be completed in the third quarter and the market will be soft until then. “Bitcoin ETFs represent only 0.1-0.20% of the existing wealth advisor sample, leaving room for both new advisor penetration and increased allocations (up to 2-3% of portfolios vs. 0.1-0.2% currently).”
Is the Ethereum ETF a ‘non-event’?
Another bearish argument is that the Ethereum ETF launch will be a “non-event” with disappointing performance compared to Bitcoin. However, since the Ethereum ETF does not have a staking feature, there may not be as much spot conversion, but analysts still expect the same source of demand as the Bitcoin ETF, just on a lower scale.
The U.S. Securities and Exchange Commission approved Form 19b-4 forms for eight spot Ethereum ETFs on May 23 from companies such as BlackRock and Fidelity. However, issuers must still ensure that their S-1 registration statement is effective before commencing trading.
According to the analyst, Ethereum lacks a clear description, unlike Bitcoin’s “digital gold”, a “decentralized computing or web3 app store” description that is “outdated”.
Analysts said Ethereum, a tokenization platform, has a much stronger use case for both stablecoin payments and real-world assets. However, regulatory clarity needs to be improved, which could be improved by a Republican presidential election victory in November and because the Trump camp has now clearly become a “cryptocurrency supporter,” they added.
“So the ETH ETF may be weak at first, but as election sentiment shifts more towards the Republican Party, cryptocurrencies will eventually become a major ‘Trump deal’ and hopes for a favorable regulatory regime will be driven by the ‘use case’ narrative for blockchain that follows will change . ETH,” Chhugani and Sapra said.
“We believe the new cryptocurrency bull cycle is a multi-year opportunity, while near-term weakness could be another opportunity to find attractive entry levels,” he concluded.
Last week, Bernstein analysts predicted that a spot Bitcoin ETF would be close to receiving approval from major financial institutions, maintaining a Bitcoin price target of $200,000 by the end of 2025.
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