Article source: Talk Li Talk Outside
Looking back at the past few years, it seems that this cycle has little to do with most retail investors. The market is mainly driven by institutions, with whales and macro capital accumulating Bitcoin, while retail investors are still waiting for a comprehensive Altcoin season that has been delayed. Retail investors are facing a continuous influx of new Altcoin projects, oversupply due to massive token unlocks, lack of new retail investors to enter and take over, and a clear lack of narrative and innovation in the crypto market...
In this cycle, Bitcoin's price has continuously broken historical highs, but Ethereum, the king of Altcoins, has performed far below expectations. I remember in April, Ethereum dropped to around $1,300, and criticism on the internet seemed endless. However, with several green candles "rescuing" the market in early May, ETH's price doubled in less than a month, and the criticism has since subsided.
Today (June 10th), ETH's price has returned to around $2,700, and recent news about Ethereum seems to be increasingly positive, such as:
1) Institutional Entry and Positioning
In July 2024, the first Ethereum spot ETF will be officially listed and traded in the US, with BlackRock being one of the more proactive applicants. Moreover, BlackRock submitted a revised S-1 file last month (May), primarily adding an Ethereum ETF physical redemption mechanism, with a final approval deadline around October 11, 2025, for its Ethereum spot ETF (ETHA).
Currently, multiple US institutions (such as Invesco and REX Shares) have submitted staking-supported Ethereum ETF applications to the SEC. If approved this year, it means institutions and retail investors (excluding some countries) can earn 3-5% annual staking returns without directly holding coins through an ETF, potentially further opening the channel for traditional funds and reevaluating ETH's value.
If you've been following recent news, you've probably seen that some institutions are actively buying ETH. In the past 30 days alone, BlackRock has purchased approximately 220,000 ETH, as shown in the image below.
Additionally, Galaxy Digital has withdrawn about 108,000 ETH to wallets, Fidelity bought around 30,000 ETH, SharpLink Gaming announced financing of $425 million for ETH reserves, and both SharpLink and Abraxas have made significant dollar investments (though specific ETH quantities are not yet disclosed)...
Of course, institutions are profit-driven. Their ultimate goal is to make money, and there might be deeper strategies at play. For instance, since announcing ETH financing, SharpLink Gaming's stock price has risen nearly 40-fold (from $2 to $80 in May). This approach might be imitated by more listed companies. Whether they choose BTC, ETH, or other potential Altcoins, this is arguably a short-term positive for BTC and ETH's prices, as they indirectly or directly bring funds and attention to cryptocurrencies.
2) Ethereum ETF Fund Flows
Since May, ETH ETF has seen continuous positive fund inflows, with the past 3 weeks reaching $820 million, reflecting renewed optimism about Ethereum's future performance.
3) Sustained On-Chain Activity
Recent on-chain fund inflows suggest Ethereum is outperforming other chains, indicating sustained on-chain activity, as shown in the image below.
For instance, Ethereum's total transaction volume reached 42 million in May, the highest since May 2021, as shown in the image.
Simultaneously, Ethereum's transaction fees last month reached $42.5 million, almost double April's amount. Additionally, the stablecoin supply on Ethereum has reached $125 billion, a new historical high, as shown in the image.
4) Ethereum's Upgrade and Preparation
Although many may have stopped paying attention to the Pectra upgrade launched in May, it theoretically can significantly improve L1 performance, reduce gas fees, and enhance user experience.
From a longer-term perspective, this could provide fundamental support for future high-frequency application scenarios like AI and DeFi. Let the bullets fly a bit longer.
5) ETH/BTC Exchange Rate Issue
Currently, many are focusing on the ETH/BTC exchange rate, as it's a key indicator for observing Altcoin market trends. As we've previously discussed: when ETH starts outperforming BTC in value, it's a strong signal that market interest in Altcoins is rapidly rising and funds are flowing into Altcoins.
From the current trend, as shown in the image, ETH/BTC dropped to a six-year low in April, with the weekly RSI hitting a historical low. Recent reviews suggest April was the bottom, and a reversal has begun. However, two key price levels need confirmation: around 0.03 and around 0.045.
If ETH/BTC successfully breaks these key resistance areas, we might see ETH's price break historical highs and reach $5,000. However, this process may not be smooth. Levels at $2,800, $3,200, $3,600, and $4,000 are important resistance points. If unable to break through, it might face continued range pullback or sideways movement. We can't rule out potential black swan events in Q3 that could delay or end the theoretical Altcoin season. So, whether we'll see such an opportunity before the end of the year remains to be seen.
We've simply discussed Ethereum from 5 aspects. In summary, ETH still has long-term growth potential and opportunities. As for whether it can break its historical high and reach $5,000 this year (in an optimistic scenario), it's hard to predict. We previously suggested in earlier articles (like in 2023) that ETH might reach $6,000-$8,000 in this bull market. However, as the market is constantly changing and unexpected events occurred last year and this year, we'll discuss price predictions more conservatively to avoid criticism.
However, we might as well take a look at Polymarket's prediction data. According to the platform's data, currently only 26% of people are betting that ETH will break its historical high by the end of the year (strictly speaking, these "people" are the funds betting on Polymarket, with 74% of funds betting that Ethereum will not break its historical high this year, using "people" is just for easier description). Although this has increased significantly from 11% in April, it shows that people still seem to have doubts about ETH breaking its historical high. As shown in the following image.
At this point, it becomes quite interesting: are you going to continue to align with the majority opinion? Or do you want to go against the grain when most people are generally pessimistic? Or do you want to continue to wait and observe for the next bear market opportunity?
But regardless of your investment decision, some core points of advice remain unchanged, such as what we mentioned in previous articles:
- Always maintain a certain level of liquidity (keeping at least 10-20% stablecoins) and don't easily go All In.
- If you are always keen on using leverage and conducting contract trading, please be mentally prepared that you might lose everything.
- When the market is rising, consider taking profits in batches, don't be overly greedy, and definitely don't blindly chase green candles.
- When the market is falling, try to remain calm, don't panic excessively, as market crashes can sometimes be opportunities.
- Rather than yearning for fish at the edge of the cliff, it's better to retreat and cast a net. Learn to DYOR and stay focused, as everyone is a different individual.
- Patience is key. Reasonably understand your risk appetite, reasonably plan your position ratio, and always face the market with a position that makes you feel comfortable.
That's all for today. The sources of images/data involved in the main text have been supplemented in the Notion. The above content is just a personal perspective and analysis, solely for learning and communication purposes, and does not constitute any investment advice.
Article source: https://mp.weixin.qq.com/s/pMp0vky_bAtVqtaTq-iZCQ
