What should we do in the face of ETHs rise?

half a month ago
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Analysts at research firm Bernstein expect approval of a spot Ethereum ETF to push Ethereum prices up 75% to $6,600.

What happened recently

In recent days, Ethereum (ETH) has jumped from $2,900 to $3,800

The rise was mainly driven by the following key events:

  • Ethereum ETF Application and Market Reaction

The U.S. Securities and Exchange Commission (SEC) is reviewing multiple Ethereum spot ETF applications. Asset management company VanEck is one of the first companies to submit an application, and the SEC is expected to make a decision on May 23. The news triggered market optimism and boosted Ethereum prices.

  • Policy shift in Washington

Galaxy Digital CEO Mike Novogratz noted that Washington’s policy shift in the last 24 hours could greatly affect the approval of an Ethereum ETF.

  • Expected changes in supply and demand

Joe Lubin, co-founder of Consensys, predicts that the approval of an Ethereum ETF will lead to a surge in demand for Ethereum, which could trigger a supply crunch, pushing up prices. He believes that institutional investors who have already gained exposure through Bitcoin ETFs will want to diversify their portfolios and turn to Ethereum ETFs.

  • Legislative support

Matt Hougan, chief investment officer at Bitwise, mentioned that the recent passage of bipartisan legislation in Washington supporting cryptocurrencies has further boosted market confidence in cryptocurrencies. This legislation repealed the SECs SAB 121 policy and relaxed strict regulations on cryptocurrency custody. The FIT 21 bill was voted through.

  • Capital inflow expectations

Timo Lehes, co-founder of Swarm, expects a large amount of capital to flow into the Ethereum market once the Ethereum ETF is approved. He pointed out that after allocating Bitcoin, investors usually seek the next largest crypto asset, Ethereum, to diversify their portfolios.

After the ETH ETF is approved, there will be a huge inflow of capital. More funds will enter the Ethereum ecosystem, which will increase the liquidity of the entire market, make transactions more active, and further promote price increases; enhance market trust, strong trading demand and lending demand; attract new projects to choose to develop on the ETH chain. Investors will not only invest in ETH, but also pay attention to and invest in other high-quality projects in the ecosystem, driving the price and development of these projects. More traditional users will enter the field of crypto assets.

ETH price forecast

Analysts at research firm Bernstein expect the approval of a spot Ethereum ETF to drive Ethereum prices up 75% to $6,600. Such a rise would be similar to Bitcoin’s 75% gain following the ETF approval in January.

How should crypto asset native users capture the market’s upside?

The following tracks and assets will see their rounds of rises, capturing different mainstream narratives at different stages. And pay attention to the launch of new assets.

1. Meme Track

The meme of the ETH ecosystem will be the direct beneficiary. With full circulation and no long-term selling pressure, it will be the first area where funds arrive. Meme can best perceive market sentiment.

  • Dogecoin (DOGE) - While Dogecoin was originally created on top of Bitcoin, it has since been integrated into the Ethereum ecosystem, particularly through various bridge and wrapper tokens.

  • Shiba Inu (SHIB) - Another Dogecoin, it is created directly on Ethereum and features decentralization and community-driven. Shiba Inu attempts to build a comprehensive ecosystem including NFTs, decentralized exchanges, and more.

  • Pepe is a cartoon character of a green frog. It was released in April 2023 and has become popular due to its wide spread on the Internet.

Their market capitalization rankings on CoinGecko are 9th, 13th, and 25th, respectively. This is enough to show the dominance of meme in the field of crypto assets.

2. Layer 2 Network

The L2 network itself is a sharded network formed to expand the performance of the eth chain, and will also attract the attention of traditional investment funds.

  • Arbitrum (ARB)

Arbitrum is one of the most popular Layer 2 solutions currently, aiming to improve Ethereum’s scalability and transaction speed. The token on the Arbitrum One mainnet is ARB.

  • Optimism (OP)

Optimism is also a major Layer 2 solution that uses Optimistic Rollup technology to achieve higher transaction throughput and lower fees. Optimisms token is OP.

  • Loopring (LRC)

Loopring is a decentralized exchange protocol that uses ZK Rollup technology to achieve efficient transactions and payments. Its native token is LRC.

  • Immutable X (IMX)

Immutable X is a Layer 2 solution focused on the NFT market, using ZK Rollup technology to enable fast and low-fee transactions. The token of Immutable X is IMX.

  • Metis (METIS)

Metis is a Layer 2 solution that uses Optimistic Rollup technology to provide efficient transactions and decentralized application platforms. The token of Metis is METIS.

  • Polygon (matic)

Polygon is a multi-functional Ethereum expansion and infrastructure development platform. Its goal is to solve Ethereums scalability issues. Its native token is matic.

Ethereums Layer 2 networks support network operations, governance, and incentive mechanisms through their own tokens. These Layer 2 solutions not only improve Ethereums scalability and user experience, but also promote the development of DeFi, NFT, and other DApps. As the Ethereum ecosystem continues to expand, these Layer 2 networks will play an increasingly important role in the future.

There are also networks such as zkSync, base, linea, etc. that have not yet issued coins. However, these projects led by investors have the attributes of high FDV and low circulation. They will be unlocked by investors, foundations, etc. within one or two years, and high inflation will be a resistance to the rise.

3. Decentralized Applications (DApp)

Including decentralized finance (DeFi), non-fungible tokens (NFT), decentralized autonomous organizations (DAO), games (GameFi) and social (SocialFi), etc. These applications generally appeared in the last round, and the degree of token dispersion is already quite high, which is very likely to form a value depression.

1. Decentralized Finance (DeFi)

1.1 Decentralized Exchange (DEX)

  • Uniswap: A decentralized exchange with liquidity pools and automated market maker (AMM) models.

  • SushiSwap: An AMM model based on Uniswap, with added community governance and liquidity mining functions.

  • Curve Finance: A DEX focused on stablecoin trading, providing low slippage and low fee transactions.

1.2 Lending Platform

  • Aave: A decentralized lending platform that provides interest income on loans and deposits.

  • Compound: A decentralized lending protocol that allows users to borrow and lend crypto assets and earn interest.

  • MakerDAO: Generates DAI stablecoins by pledging crypto assets and provides lending services.

1.3 Derivatives

  • Synthetix: A synthetic asset protocol that allows users to create and trade synthetic assets.

  • dYdX: A decentralized derivatives trading platform that provides perpetual contracts and leveraged trading.

1.4 Aggregator

  • Yearn Finance: DeFi yield aggregator that helps users find the highest yield investment opportunities in different DeFi protocols.

  • 1inch: DEX aggregator, finding the best trading paths and prices across multiple DEXs.

2. Non-fungible tokens (NFTs)

2.1 NFT Market

  • OpenSea: The largest NFT marketplace where users can create, buy, sell, and discover NFTs.

  • Rarible: A decentralized NFT marketplace where users can create and trade NFTs and are governed by the RARI token.

  • Blur is a relatively new NFT (Non-Fungible Token) marketplace in the cryptocurrency and blockchain space.

3. Games and virtual worlds

  • Axie Infinity: An NFT-based pet breeding and battle game where players can buy, breed, and battle Axies.

  • Decentraland: A virtual reality platform where users can create, experience, and monetize content and applications.

  • Gods Unchained: A blockchain card game where players can collect and trade NFT cards.

  • The Sandbox: A virtual world where users can create, own, and monetize virtual experiences and assets.

4. Projects related to liquidity pledge

LSD: LDO, SSV, PRL; Flywheel, Pendle; Restaking REZ, ETHFI;

The above only lists some projects. The ETH ecosystem is rich in assets and is still developing rapidly. There are also Eigenlayer in the modular field and Tornado Cash in the privacy field. The overall speed of project innovation is very fast. In the current market, funds also tend to buy new rather than old + buy projects with full circulation narratives. You can ambush mainstream projects or look for new narratives. If you participate in them in the early stage, you need to pay attention to the rotation of funds.

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