What should we do in the face of ETH's price increase?
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What should we do in the face of ETH's price increase?
How should native crypto asset users capture market upside?
Navigating Web3 tides with focused insightsWhat Has Happened Recently
In recent days, Ethereum (ETH) surged from $2,900 to $3,800.
The rally was primarily driven by several key developments:
1. Ethereum ETF Applications and Market Reaction
The U.S. Securities and Exchange Commission (SEC) is currently reviewing multiple spot Ethereum ETF applications. Asset management firm VanEck was among the first to file, with a decision expected by May 23. This news has sparked market optimism, fueling ETH's price rise.
2. Policy Shift in Washington
Mike Novogratz, CEO of Galaxy Digital, noted that a policy shift in Washington within the last 24 hours could significantly impact the approval of Ethereum ETFs.
3. Anticipated Changes in Supply and Demand
Joe Lubin, co-founder of Consensys, predicted that approval of an Ethereum ETF would trigger a surge in demand for ETH, potentially leading to supply shortages and driving prices higher. He believes institutional investors who have already gained exposure through Bitcoin ETFs will seek portfolio diversification by turning to Ethereum ETFs.
4. Legislative Support
Matt Hougan, Chief Investment Officer at Bitwise, highlighted that Washington recently passed bipartisan legislation supporting cryptocurrency, further boosting market confidence. The bill repeals the SEC’s SAB 121 policy, relaxing strict rules on crypto custody. The FIT21 Act has passed its vote.
5. Expected Capital Inflows
Timo Lehes, co-founder of Swarm, expects significant capital inflows into the Ethereum market once an ETF is approved. He points out that after allocating to Bitcoin, investors typically look for the next largest crypto asset—Ethereum—to diversify their portfolios.
Once ETH ETFs are approved, substantial capital inflows are expected. Increased funding flowing into the Ethereum ecosystem will enhance overall market liquidity, making trading more active and further pushing up prices. It will strengthen market trust, boost trading and lending demand, attract new projects to build on the ETH chain, and encourage investors to not only invest in ETH but also explore other high-quality projects within the ecosystem, driving their value and development. More traditional users will enter the crypto space.
ETH Price Outlook:
Analysts at research firm Bernstein predict that approval of a spot Ethereum ETF could drive ETH’s price up by 75%, reaching $6,600. This would mirror Bitcoin’s 75% surge following ETF approval in January.
How Native Crypto Users Can Capture Market Gains
The following sectors and assets are poised for successive rallies. Focus on different dominant narratives at various stages and stay alert to new asset launches.
1. Meme Sector
Meme tokens within the ETH ecosystem will be direct beneficiaries—fully liquid with no long-term selling pressure, they are likely to be the first destinations for capital. Memes are most sensitive to market sentiment.
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Dogecoin (DOGE) – Although originally built on Bitcoin, Dogecoin has since been integrated into the Ethereum ecosystem via bridges and wrapped tokens.
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Shiba Inu (SHIB) – Another dog-themed token, directly launched on Ethereum, known for its decentralized, community-driven approach. Shiba Inu aims to build a comprehensive ecosystem including NFTs and decentralized exchanges.
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Pepe (PEPE) – A cartoon green frog meme that launched in April 2023 and quickly gained widespread popularity online.
On CoinGecko, they rank ninth, thirteenth, and twenty-fifth by market cap, respectively—demonstrating the dominance of memes in the crypto space.
2. Layer 2 Networks
Layer 2 networks were created to scale Ethereum’s performance and are now attracting attention from traditional investors.
Arbitrum (ARB)
Arbitrum is one of the most popular Layer 2 solutions, designed to enhance Ethereum’s scalability and transaction speed. Its native token on the Arbitrum One mainnet is ARB.
Optimism (OP)
Optimism is another major Layer 2 solution using Optimistic Rollup technology to achieve higher throughput and lower fees. Its native token is OP.
Loopring (LRC)
Loopring is a decentralized exchange protocol utilizing ZK Rollup technology for efficient trading and payments. Its native token is LRC.
Immutable X (IMX)
Immutable X is a Layer 2 solution focused on NFT markets, leveraging ZK Rollup for fast, low-cost transactions. Its native token is IMX.
Metis (METIS)
Metis is a Layer 2 solution using Optimistic Rollup technology, aiming to provide a high-performance platform for decentralized applications. Its native token is METIS.
Polygon (MATIC)
Polygon is a multi-functional Ethereum scaling and infrastructure development platform designed to solve Ethereum’s scalability challenges. Its native token is MATIC.
Ethereum’s Layer 2 networks use their respective tokens to support operations, governance, and incentives. These solutions not only improve Ethereum’s scalability and user experience but also accelerate the growth of DeFi, NFTs, and other DApps. As the Ethereum ecosystem expands, these Layer 2 networks will play an increasingly critical role.
Other notable networks such as zkSync, Base, and Linea have not yet issued tokens. However, many of these venture-backed projects feature high FDV (Fully Diluted Valuation) and low circulating supply. Over the next one to two years, token unlocks from investors and foundations may lead to high inflation, which could hinder price appreciation.
3. Decentralized Applications (DApps)
This includes decentralized finance (DeFi), non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), gaming (GameFi), and social platforms (SocialFi). Many of these applications emerged during the previous cycle and now have widely distributed tokens, potentially forming value opportunities.
1. Decentralized Finance (DeFi)
1.1 Decentralized Exchanges (DEX)
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Uniswap: A decentralized exchange using liquidity pools and an automated market maker (AMM) model.
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SushiSwap: Built on Uniswap’s AMM model, enhanced with community governance and liquidity mining features.
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Curve Finance: A DEX specialized in stablecoin trading, offering low slippage and low fees.
1.2 Lending Platforms
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Aave: A decentralized lending platform enabling borrowing and earning interest on deposits.
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Compound: A decentralized lending protocol allowing users to lend and borrow crypto assets and earn interest.
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MakerDAO: Enables users to generate the DAI stablecoin by collateralizing crypto assets and offers lending services.
1.3 Derivatives
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Synthetix: A synthetic asset protocol allowing users to create and trade synthetic versions of real-world assets.
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dYdX: A decentralized derivatives exchange offering perpetual contracts and leveraged trading.
1.4 Aggregators
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Yearn Finance: A DeFi yield aggregator that helps users find the highest returns across various DeFi protocols.
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1inch: A DEX aggregator that finds optimal trading routes and prices across multiple exchanges.
2. Non-Fungible Tokens (NFTs)
2.1 NFT Marketplaces
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OpenSea: The largest NFT marketplace where users can create, buy, sell, and discover NFTs.
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Rarible: A decentralized NFT marketplace allowing users to mint and trade NFTs, governed by the RARI token.
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Blur: A relatively new NFT marketplace platform in the cryptocurrency and blockchain space.
3. Gaming and Virtual Worlds
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Axie Infinity: An NFT-based pet breeding and battle game where players buy, breed, and battle Axies.
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Decentraland: A virtual reality platform where users create, experience, and monetize digital content and applications.
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Gods Unchained: A blockchain-based collectible card game where players trade NFT cards.
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The Sandbox: A virtual world where users create, own, and monetize virtual experiences and assets.
4. Projects Related to Liquid Staking
LSD: LDO, SSV, PRL; Flywheel, Pendle; Restaking: REZ, ETHFI;
Only selected projects are listed above. The Ethereum ecosystem is rich with assets and continues to grow rapidly, including emerging areas like modular infrastructure (e.g., EigenLayer) and privacy (e.g., Tornado Cash). New projects emerge quickly. Current market trends favor newer projects over older ones, particularly those with full liquidity and strong narratives. Investors can either position early in mainstream projects or identify emerging narratives for early participation, while remaining mindful of capital rotation dynamics.
References:
https://www.dlnews.com/articles/markets/ethereum-etf-approval-drives-seven-expert-price-predictions/?utm_source=twitter&utm_medium=organic_social&utm_campaign=
https://cointelegraph.com/news/fit21-crypto-bill-house-vote-bipartisan
https://panewslab.com/zh/articledetails/1kk7dylcFt.html
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