After years of underperformance, Ethereum seems like it is finally catching a bid. And while this time it truly might be different, as the reason for this bid is the same that drove Bitcoin from 40,000 to over 100,000 in one year, this is not the main reason for today’s post. I have shared my thoughts on ETH in a Twitter post a couple of days ago (https://x.com/abetrade/status/1953921280220237932), and while I don’t think you should be top-blasting it right now, the trend-strength and narrative are still there. While Ethereum is having its moment, the strength is clearly coming from the institutional bid. We can see that not only on the ETF net inflow chart, but also in the fact that the chain itself is not heavily used, as gas fees are remaining low. What you can very often see in crypto, and other markets as well, is that traders who usually missed the main narrative end up desperately asking the question: “What is the next …?”. Logically, for ETH, this would be the higher beta plays of coins that are either on ETH or tightly correlated to it. In the last couple of days, we could see this narrative, especially in coins such as Lido, Pendle, or Arbitrum. Both Lido and Pendle made a new all-time high in notional open interest, despite the price being much lower. What about funding rates? Funding rates are consistently brought up as the main reason that “we are still early” and the retail is not here yet. While it is definitely great to see funding rates around the baseline and not having to pay a mortgage for just being long, I would argue that markets have changed and evolved drastically over the last few years, and a lot of the funding extremes get arbitraged very quickly. Despite that, we could see a basis shift on the relative scale in the last couple of days. The chart below shows the z-score of basis for PENDLEUSDT on a 10-day lookback, which moved above the 95th percentile with the recent rally. So is this the time to bid the beta? I would personally say not, as during the current narrative, the next ETH is ETH. From the price relationship, we can also see that Ethereum is outperforming all its beta significantly, which to me loses meaning to trying to bid less liquid assets if it can’t outperform its benchmark and has a tendency to correct much harder on pullbacks.(adam)