In-Depth: ETH's Weak Rise, What’s Next?

Whales and institutions determine the upper limit of price increases. The optional configuration targets for institutions and whales span both the stock market and the cryptocurrency space. Therefore, let's analyze the configuration value of ETH from the perspective of whales, who are not optimistic about it.

Note: This is not to say that ETH won't rise; it merely discusses the attractiveness of its configuration. For market predictions, one should consult the gods—just like any worthless altcoin can rise at any time, but you and I might not buy it because we believe BTC is better. The same logic applies here.

With this premise understood, let's examine the attractiveness of ETH:

1. Horizontal Valuation

The so-called configuration is because institutions and whales do not need to go all-in on any single target. Let's list some targets that may already be significantly overvalued for comparison.

• ETH: $300 billion
• AMD: $224.6 billion (NVIDIA's competitor in the AI era)
• Pinduoduo: $140 billion
• XAI: $120 billion (including Musk's Xai and Twitter)
• Pop Mart: $44 billion

Related to the Cryptocurrency Space

• Robinhood: $90 billion (18 million users)
• Coinbase: $90 billion (compliant exchange)
• CRCL: $39 billion (pioneering compliant stablecoin strategy in the U.S.)
• $HYPE: $1.3 billion (infinite buybacks + high income + high growth, FDV of $4 billion)
• $HSK: $8.7 million (Eastern compliant exchange + stablecoin + OTC + global expansion, FDV of $60 million)
• $WLFI: $10 billion OTC price
• On-chain ecological strategic token issued by the Trump family, covering stablecoins like USD1: $9 billion

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Valuation cannot simply be viewed through market capitalization. For the above comparative targets, most scenarios are quite clear, so we won't elaborate on each one. Instead, let's focus on the scenarios for ETH.

2. Lack of Demand for ETH, Insufficient Upward Momentum

In the referenced research report, ETH is likened to oil, but the argument mainly considers that the growth of stablecoins, DeFi, and RWA will lead to an increase in ETH's pricing.

However, this connection relies heavily on imagination and is clearly insufficient. For oil, the industrial boom creates endless demand, making it a hard currency like gold—unlike gold, the demand for oil is substantial.

ETH, on the other hand, faces a completely different predicament. Whether it’s stablecoins, DeFi, or RWA, there is no actual or significant demand for ETH, which is evident. Let's analyze this further:

1. Demand for ETH from Stablecoin Expansion

   First, as stablecoins develop, the demand for ETH's main chain will decrease because, from the user end, they ultimately do not need to focus on any specific chain. Various applications will find ways to increase speed and reduce fees to zero, so stablecoins will ultimately exist on various high-speed chains, integrating into users' daily lives.

   The stablecoins existing on the main chain primarily maximize the pursuit of secure storage rather than transactions. Their amounts may be large, but transaction and transfer activities will be minimal.

   Secondly, currently, whether it’s USDT or USDC, they are all developing their proprietary chains as high-speed networks for stablecoins. This is a trend.

   Some are completely restarting from scratch, while others are developing proprietary chains based on ETH's L2 technology.

2. RWA and DeFi

   These two involve heavy assets, and the main chain is expected to attract more resources, but they are both low-frequency, especially since both RWA and DeFi currently involve scenarios like lending, which are the lowest frequency. The demand for burning or using ETH is very low.

   Looking back at ETH's major price increases, they were driven by ICOs, NFTs, and DeFi, all of which used ETH for settlement, leading to a short-term surge in demand for ETH—regardless of the price, if you want to trade NFTs without ETH, you need ETH.

   Such scenarios are unlikely to reoccur in the future. In meme trading, people have already started using SOL, and other innovations similar to NFTs and DeFi are hard to replicate—one feels that if they were to emerge, they should have appeared earlier.

   Of course, if a significant innovation does emerge, all the inferences in this article will be overturned, as there will be substantial short-term demand. However, this does not affect the reference price in this article—when a major innovation appears, just buy it, speculate, and then return to the anchor coordinates discussed here.

3. Consensus on ETH Leading to Price Increase Potential

   Currently, there is an implicit logic that the growth of RWA, DeFi, and stablecoins will enhance ETH's consensus, which in turn leads to price increases. Price increases lead institutions to use it as collateral, and the demand for collateral further drives up the price.

   This is somewhat similar to a "vacuous argument." If either foot misses the ground, the argument fails— for example, as collateral, BTC is already unbeatable.

3. Others

ETH's security remains the strongest in the industry outside of BTC, but the pricing for security has some ambiguity. However, you can still refer to the first part of this article. If you are a whale with money looking to configure assets, you might also consider assets that are both good and have significant potential, making the answer a bit clearer.

Additionally, within the cryptocurrency space, ETH faces significant competition from other chains. For instance, SOL, Base, ARB, and even BSC have already undergone sufficient time and user transaction tests. People no longer care about their degree of decentralization; most of what ETH can do, they can do as well—what cannot be done is already hard to be generally overvalued at over $200 billion.

4. ETH's Rise

The discussion above mainly revolves around demand and intrinsic value, but there is another variable in the cryptocurrency market that affects price increases: market manipulators.

We can see in some meme coins that despite having worse consensus, they rise even more fiercely, such as GOAT in the AI era, even though it is a top-tier coin. As a result, wild market manipulators (institutions) picked up a worthless second-tier coin, gathered enough chips, and then drove the price up to attract people. For example, after ORDI surged, a bunch of large institutions and big players started working on SATS, and many more followed.

In the meme space, there haven't been many opportunities in the past six months. Some big players' predictions are intertwined with conspiracies, the lack of evidence, and hidden positions, making everything feel dull.

Currently, retail investors are not willing to buy much ETH, and if institutions still hold a large number of tokens they want to sell, it will be very difficult to boost trading volume and create momentum. If they want to sell $10 billion, using $500 million as capital to create momentum and drive the price might be feasible, pulling and selling at the same time. This is a game between trusting capital and trapped capital.

The cryptocurrency market is "undergoing an unprecedented upheaval," and ETH may be the last tremor of the old era.

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