In the comments at the end of Thursday's article, a reader mentioned: the last market cycle was a double top.

Indeed, the last market cycle formed two peaks.

However, one cannot ignore a crucial factor that allowed such a market to develop: right after the first peak, Ethereum saw a new wave of innovation led by NFTs.

Moreover, the innovation of NFTs is more unique than DeFi—it has gone mainstream. It has influenced celebrities from various sectors of the traditional ecosystem, including sports stars, talk show hosts, and entertainment figures, and has also impacted traditional art institutions—some contemporary art museums in countries like the United States and Germany have included classic NFTs from Ethereum (such as CryptoPunks) in their contemporary art collections; Christie's and Sotheby's have auctioned several batches of top NFTs from the Ethereum ecosystem.

This level of influence is quite rare among all innovations in the crypto ecosystem.

It is under the guidance of this innovation that the entire crypto market was able to form a second peak, which even surpassed the first peak.

This highlights the importance of innovation and is also the reason I have consistently emphasized that the internal factors of the crypto ecosystem are far more important than external factors.

That is why I wrote in the last article:

“If the crypto ecosystem itself does not see disruptive and sustained innovative applications and business models in the second half of the year, it is very likely that Bitcoin's performance in the second half will still be strongly influenced by the U.S. stock market”

“If the crypto ecosystem can produce miracles in the second half of the year, generating disruptive innovations and applications, then Bitcoin's rise will follow a different logic”

This applies to Bitcoin, and even more so to Ethereum.

In this round, Ethereum dropped from nearly $4,000 to as low as $1,500, and then rebounded to the current $2,500. It seems to have rekindled market enthusiasm, but in my view, this enthusiasm is quite limited. On one hand, this increase is largely driven by Bitcoin, and on the other hand, it somewhat reflects a rebound from an oversold condition.

For Ethereum to establish a stable and solid market in the second half of the year, it also requires strong innovation.

Although the AI + Crypto sub-ecosystem has begun to regain some vitality, its influence, at least so far, is still insufficient to spread throughout the entire crypto ecosystem and is not enough to become the main driving force behind Ethereum's price increase.

Therefore, if the crypto ecosystem still lacks strong innovation in the second half of the year and remains as it is now, it may be difficult to break through the previous cycle's new highs. Even if it can break through the previous cycle's new highs, that price level would be unstable and could collapse at any time.

A reader asked during Saturday's online discussion: If Ethereum rises to $10,000 in the second half of the year, would I sell?

First of all, I think if the entire crypto ecosystem continues to develop in a lukewarm manner in the second half of the year, the likelihood of Ethereum reaching $10,000 is very low; but if it unexpectedly rises to $10,000, I would likely sell a significant portion because that price level is clearly overvalued.

Unless the ecosystem experiences a miraculous innovation, that $10,000 may not be considered high and could still be worth holding onto.

So whether to sell or not will depend on the state of the ecosystem at that time, rather than simply using an absolute price level as the standard.

Regarding the potential for the development of the Ethereum ecosystem, it seems that more and more traditional institutions are beginning to build their infrastructure around Ethereum, especially the moves made by domestic internet giants in this area are noteworthy.

For example, Ant Group recently announced plans to build a second-layer expansion based on Ethereum.

Relevant executives discussed the details of this layout in an interview, stating that:

Ant is building a consortium chain domestically, fully compliant with domestic laws for domestic operations.

Overseas (in Hong Kong), they are constructing a permissionless Ethereum second-layer expansion as a "public chain." This second-layer expansion will not issue tokens. However, since it is permissionless, anyone can deploy applications on it. Nevertheless, projects issued by Ant on this platform will still operate under a permissioned model.

Additionally, Ant will use a cross-chain bridge to connect the domestic consortium chain and the overseas second-layer expansion.

I estimate that this may become a typical way for many traditional financial institutions or companies to enter the crypto ecosystem in the future.

These institutions entering the Ethereum ecosystem will benefit Ethereum, but most of the projects they issue will have little to do with retail investors. So far, it is still the second-layer expansions built by pure crypto ecosystem teams that are the true boon for retail investors.

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