What should we do in the face of the rise of ETH?

CN
1 year ago

Cryptocurrency native users should capture market uptrends

Recent developments

In recent days, Ethereum (ETH) has surged from $2900 to $3800.

The surge is mainly driven by the following key events:

1. Ethereum ETF application and market reaction

The U.S. Securities and Exchange Commission (SEC) is reviewing multiple Ethereum spot ETF applications. Asset management company VanEck is one of the first companies to submit an application, and the SEC is expected to make a decision on May 23. This news has sparked optimism in the market, driving the surge in Ethereum's price.

2. Policy shift in Washington

Galaxy Digital CEO Mike Novogratz pointed out that Washington's policy shift in the last 24 hours could greatly impact the approval of Ethereum ETFs.

3. Expected changes in supply and demand

Joe Lubin, co-founder of Consensys, predicts that the approval of Ethereum ETFs will lead to a surge in demand for Ethereum, potentially causing supply shortages and driving up prices. He believes that institutional investors who have already gained exposure through Bitcoin ETFs will seek to diversify their portfolios by turning to Ethereum ETFs.

4. Legislative support

Matt Hougan, Chief Investment Officer of Bitwise, mentioned that Washington recently passed a bipartisan legislation supporting cryptocurrencies, further boosting market confidence in cryptocurrencies. This legislation repealed SEC's SAB 121 policy, easing strict regulations on cryptocurrency custody. The FIT21 bill was passed.

5. Expected capital inflows

Timo Lehes, co-founder of Swarm, expects that once Ethereum ETFs are approved, a large amount of capital will flow into the Ethereum market. He pointed out that after allocating to Bitcoin, investors typically seek the next largest cryptocurrency, which is Ethereum, for portfolio diversification.

After the approval of ETH's ETF, there will be a huge influx of capital, more funds entering the Ethereum ecosystem, increasing overall market liquidity, making trading more active, further promoting price increases; strengthening market trust, vigorous trading and lending demand; attracting new projects to choose to develop on the Ethereum chain, investors will not only invest in ETH, but also pay attention to and invest in other high-quality projects in the ecosystem, driving the prices and development of these projects. More traditional users will enter the cryptocurrency field.

ETH price expectations:

Analysts at Bernstein, a research company, expect that the approval of Ethereum spot ETFs will drive a 75% increase in Ethereum's price, reaching $6600. This increase will be similar to the 75% surge in Bitcoin's price after ETF approval in January.

Cryptocurrency native users should capture market uptrends

The following tracks and assets will experience successive uptrends, capturing different mainstream narratives at different stages, and paying attention to the launch of new assets.

1. Meme track

Memes in the Ethereum ecosystem will be direct beneficiaries, with full circulation and no long-term selling pressure, making them the first area where funds will arrive, and memes are most sensitive to market sentiment.

  1. Dogecoin (DOGE) - Although Dogecoin was initially created based on Bitcoin, it has also been integrated into the Ethereum ecosystem, especially through various bridges and wrapped tokens.

  2. Shiba Inu (SHIB) - Another dog-themed coin created directly on Ethereum, characterized by decentralization and community-driven features. Shiba Inu aims to build a comprehensive ecosystem, including NFTs, decentralized exchanges, and more.

  3. Pepe (Pepe) is a cartoon image of a green frog, issued in April 2023, and has gained widespread popularity on the Internet.

They are ranked ninth, thirteenth, and twenty-fifth on coingecko. This is enough to show the dominance of memes in the cryptocurrency field.

2. Layer2 networks

L2 networks are formed to expand the performance of the Ethereum chain and will also attract traditional investment funds' attention.

Arbitrum (ARB)

Arbitrum is currently one of the most popular Layer2 solutions, aiming to improve Ethereum's scalability and transaction speed. The token on the Arbitrum One mainnet is ARB.

Optimism (OP)

Optimism is also a major Layer2 solution, using Optimistic Rollup technology to achieve higher transaction throughput and lower fees. The token for Optimism is OP.

Loopring (LRC)

Loopring is a decentralized exchange protocol that uses ZK Rollup technology to achieve efficient trading and payments. Its native token is LRC.

Immutable X (IMX)

Immutable X is a Layer2 solution focused on the NFT market, using ZK Rollup technology to achieve fast and low-cost transactions. The token for Immutable X is IMX.

Metis (METIS)

Metis is a Layer2 solution using Optimistic Rollup technology, aiming to provide efficient trading and a decentralized application platform. The token for Metis is METIS.

Polygon (matic)

Polygon is a multi-purpose Ethereum scaling and infrastructure development platform. Its goal is to solve Ethereum's scalability issues. Its native token is matic.

Layer2 networks of Ethereum support network operations, governance, and incentive mechanisms through their respective tokens. These Layer2 solutions not only improve Ethereum's scalability and user experience, but also drive the development of DeFi, NFTs, and other DApps. As the Ethereum ecosystem continues to expand, these Layer2 networks will play an increasingly important role in the future.

There are also networks such as zkSync, base, and linea that have not yet been launched, but these projects led by capital have high FDV and low circulation properties, and will face unlocking by capital, foundations, etc. within one or two years, high inflation will be a resistance to the uptrend.

Three, Decentralized Applications (DApps)

Including decentralized finance (DeFi), non-fungible tokens (NFT), decentralized autonomous organizations (DAO), games (GameFi), and social (SocialFi), etc. These applications were widespread in the previous cycle, and the token distribution is already quite high, making it highly likely to form a value oasis.

1. Decentralized Finance (DeFi)

1.1 Decentralized Exchanges (DEX)

  • Uniswap: A decentralized exchange with liquidity pools and an automated market maker (AMM) model.

  • SushiSwap: Based on the AMM model of Uniswap, it has added community governance and liquidity mining functions.

  • Curve Finance: A DEX focused on stablecoin trading, providing low slippage and low-cost transactions.

1.2 Lending platforms

  • Aave: A decentralized lending platform that offers borrowing and deposit interest income.

  • Compound: A decentralized lending protocol that allows users to borrow and lend cryptocurrencies and earn interest.

  • MakerDAO: Generates the DAI stablecoin by collateralizing cryptocurrencies and provides lending services.

1.3 Derivatives

  • Synthetix: A synthetic asset protocol that allows users to create and trade synthetic assets.

  • dYdX: A decentralized derivatives trading platform that offers perpetual contracts and leveraged trading.

1.4 Aggregators

  • Yearn Finance: A DeFi yield aggregator that helps users find the highest-yielding investment opportunities in different DeFi protocols.

  • 1inch: A DEX aggregator that finds the best trading path and price across multiple DEXs.

2. Non-Fungible Tokens (NFT)

2.1 NFT Market

  • OpenSea: The largest NFT marketplace where users can create, buy, sell, and discover NFTs.

  • Rarible: A decentralized NFT marketplace where users can create and trade NFTs, and participate in governance using the RARI token.

  • Blur is a relatively new NFT (non-fungible token) marketplace in the cryptocurrency and blockchain field.

3. Gaming and Virtual Worlds

  • Axie Infinity: A pet breeding and battling game based on NFTs, where players can buy, breed, and battle Axies.

  • Decentraland: A virtual reality platform where users can create, experience, and monetize content and applications.

  • Gods Unchained: A blockchain-based card game where players can collect and trade NFT cards.

  • The Sandbox: A virtual world where users can create, own, and monetize virtual experiences and assets.

4. Projects related to liquidity staking

LSD: LDO, SSV, PRL; Flywheel, Pendle; Restaking REZ, ETHFI;

The above are just a few projects. The Ethereum ecosystem is rich in assets and is still rapidly developing. There are also modular areas like eigenlayer and privacy areas like Tornado Cash. The overall pace of new projects emerging is very fast. Currently, the market funds tend to favor projects with new narratives and full circulation. You can position yourself in mainstream projects or look for new narratives, and participate early, but be mindful of fund rotation and uptrends.

Reference links:

[1] Ethereum ETF Approval Drives Seven Expert Price Predictions

[2] FIT21 Crypto Bill House Vote Bipartisan

[3] Pionex

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