Bitcoin has surpassed 100,000 USD; when will Ethereum take off?
Source: Talking Li and Talking Outside
In January 2021, ETH broke through its previous high of $1400 (from January 2018), and after a brief adjustment of less than two months, it entered a rapid ascent mode, reaching a peak of around $4400. This also happened to be a year after Bitcoin's third halving.
Historically, ETH's rise often lags behind BTC, which is quite normal behavior. If history were to repeat itself, we could expect that in the first quarter of next year (2025), ETH might start its real upward trend.
As of the writing of this article, ETH's price is close to $3900, which seems to be a good new starting point. It remains to be seen whether it can stabilize in this range and continue to break through in the next two weeks. As shown in the figure below.
For a long time, many people have been FUDing Ethereum, but if we consider that from June 2022, when it was over $800, ETH's price has nearly increased by about 5 times. If nothing unexpected happens, we might see ETH above $5000 by next year.
Next, let's continue to briefly outline what we need to pay attention to in a broad sense, or what favorable factors ETH still has:
1. Federal Reserve Rate Cut Cycle
According to the dot plot released in September, the Federal Reserve's interest rate is expected to decrease by about 2% from the current 4.75% over the next two years. As shown in the figure below. Therefore, from a macroeconomic perspective, we are still in the early to mid-stage of a new economic cycle, and with changes in global liquidity, some funds will inevitably flow directly or indirectly into the crypto market.
2. ETH ETF Inflows/Outflows
Currently, over 28.5% of ETH tokens are staked (as of the writing of this article, 34,292,149 ETH are staked). One of the key areas we need to focus on next is the inflow/outflow data of ETF funds, which will become one of the most important factors influencing ETH's price direction. Once more funds (liquidity) start to flow into Ethereum on a large scale, it will further drive the development of the Ethereum ecosystem (DeFi ecosystem, L2-related ecosystems, etc.), thereby increasing the demand for ETH tokens.
Currently, ETH is the only cryptocurrency besides BTC that is available through ETFs, and from recent funding dynamics, ETH ETFs are continuously generating positive inflows. As shown in the figure below.
According to lookonchain data monitoring, in the past month, 9 Ethereum ETFs have significantly increased their ETH holdings, totaling 362,474 ETH (approximately $1.42 billion), which is an increase of 4,363% compared to last month. As shown in the figure below.
3. ETH/BTC Ratio
This exchange rate indicator is also used by many analysts to observe potential reversal trends or altcoin seasons. Generally speaking, if you notice that ETH starts to outperform BTC in terms of exchange rate value, it is a strong signal indicating that market interest in altcoins is rapidly rising and funds are flowing into altcoins. From the current ratio trend, it has basically reached a relatively bottom range, and the MACD indicator has also shown signs of a rebound. As shown in the figure below.
4. Continued Accumulation by Whales
Currently, the amount of ETH controlled by ETH whales has increased by over 30% compared to a year ago, with the largest 200 Ethereum wallet addresses now holding a total of 83.69 million ETH. As shown in the figure below.
Over the past year, BTC has continuously set historical highs, while ETH has remained at a certain distance from its ATH. Despite this, whales have been continuously accumulating ETH, while retail investors have been criticizing ETH as garbage.
5. Pectra Upgrade
The Pectra upgrade is considered the next important milestone for the Ethereum network, expected to be implemented in the first quarter of 2025. This upgrade focuses on multiple technical improvements and optimizations, mainly consisting of two parts: the Prague execution layer upgrade and the Electra protocol layer upgrade.
Although the Pectra upgrade currently seems to lack a prominent goal, it focuses more on account abstraction, smart contract efficiency, improvements for validators, Verkle trees for better data management, second-layer solutions, and PeerDAS, among other aspects. We expect that through a series of technical improvements and optimizations, the Ethereum network will become faster, cheaper for transactions, more scalable, and easier to use. At the same time, the market does not rule out the possibility of another wave of speculation due to this upgrade.
For more information about the Pectra upgrade, interested friends can directly use Google or ChatGPT to search or learn more.
In summary, regarding Ethereum, we still maintain the viewpoint from previous articles: as a cryptocurrency that does not have unlocking and miner selling pressure, a coin that remains the king of altcoins, a coin that is still the largest crypto ecosystem, and the only cryptocurrency besides BTC available through ETFs… we should remain more optimistic about Ethereum's future development. If most people are FUDing Ethereum, it indicates that it might be the right time for you to continue accumulating.
Note: The above content is just personal opinions and analyses, intended for learning records and communication purposes only, and does not constitute any investment advice. Any projects or websites mentioned in the article have no direct interest relationship with Talking Li and Talking Outside (Talking Li and Talking Outside does not accept any advertisements from project parties). Please evaluate the safety of the corresponding projects or websites on your own. Investment always carries risks; avoid entering situations you don't understand and refrain from playing in situations you can't afford to lose.
