Key Highlights
- Geoffrey Kendrick from Standard Chartered views Strategy’s Bitcoin sale as a pivotal moment for the ETH/BTC dynamic
- Ethereum posted one of 2024’s strongest single-day rallies relative to Bitcoin following the announcement
- Year-end forecast projects ETH climbing 41% to approximately $2,700, with ultimate target of $4,000
- Companies holding Ethereum in their treasuries can generate staking rewards, unlike Bitcoin holders
- Bitcoin fell close to 5% during the session while Ethereum remained resilient with under 2% decline
Geoffrey Kendrick, who leads digital asset research at Standard Chartered, believes Strategy’s recent decision to sell Bitcoin may signal the start of a sustained period where Ethereum outperforms Bitcoin. He outlined this perspective in a client briefing released Tuesday.
Strategy offloaded roughly $2.5 million in Bitcoin holdings — marking the company’s first divestment since 2022. According to Kendrick, this transaction has established conditions that favor Ethereum over an extended timeframe.
Following public disclosure of the sale, Ethereum delivered one of its most significant daily performance improvements versus Bitcoin observed throughout 2024. Similar relative strength movements have occurred just 23 times since the year began.
Bitcoin tumbled to lows near $68,000 during the trading session, registering a decline approaching 5%. Meanwhile, Ethereum maintained support above $1,900, experiencing less than 2% downside pressure during the identical timeframe.
The Case for an Emerging Market Shift
Kendrick argues that Ethereum’s price action hasn’t caught up with network developments. In a recent analysis, he drew parallels between ETH’s current price-to-fundamentals disconnect and Amazon’s experience during the dot-com bubble collapse — a period when business metrics strengthened even as share prices plummeted.
His year-end valuation forecast places Ethereum at $4,000. Additionally, he anticipates the ETH/BTC trading ratio will decline to 0.04 before year-end, a threshold last touched in September. Such a ratio would imply Bitcoin trading near $67,300 while Ethereum reaches roughly $2,700, representing a 41% appreciation from present levels.
Kendrick emphasized that his thesis remains intact regardless of whether Strategy repurchases more Bitcoin than it divested. He contends that the fundamental market structure supporting Ethereum has undergone a transformation.
Ethereum currently trades 22% below its year-to-date starting point, trailing Bitcoin’s performance over the same stretch. Nevertheless, Kendrick interprets this relative weakness as a precursor to trend reversal.
Staking Creates Structural Advantage for ETH Treasury Companies
Kendrick highlighted a fundamental distinction between corporate treasuries holding Ethereum versus those holding Bitcoin. Organizations maintaining Ethereum reserves can stake their holdings to generate yield through network validation activities. This capability significantly reduces selling pressure from these entities.
Bitcoin treasury corporations, Strategy among them, lack this income-generating mechanism. They cannot produce returns from passive BTC ownership.
Kendrick forecasts that Ethereum-focused treasury companies will eventually command higher Market Net Asset Value multiples than Strategy. The mNAVs across most digital asset treasury operations have contracted recently, mirroring broader cryptocurrency market weakness.
Tom Lee, who chairs Bitmine — an Ethereum treasury corporation — reinforced Kendrick’s assessment. He stated that Ethereum’s market valuation hasn’t aligned with its robust network fundamentals.
Both Strategy and Bitmine have maintained their accumulation strategies despite deteriorating market conditions. Strategy has leveraged its preferred security instrument, STRC, to finance additional Bitcoin acquisitions as its equity valuation has declined.
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