In the turbulent situation, can Ethereum's "transformation" reach new heights again?

Organizer: ChainCatcher

Despite the recent geopolitical turmoil, Ethereum has become the focus of market attention, defying the overall market pullback due to ETF net inflows and active capital flow. Meanwhile, the Ethereum Foundation has initiated financial policy reforms and internal restructuring, signaling a strategic adjustment. How this move will affect Ethereum's mid- to long-term trends has become a core topic of discussion in the crypto space, indicating that Ethereum is at a critical juncture of "transformation," with the possibility of breaking new highs drawing significant attention.

In this issue of Space "Transformation: Can Ethereum, with a fundamental reversal, break new highs?" we invite eight guests: Kiwi, Head of Research at OKX Ventures; Christine, Co-founder of Infini; Yinghao LIN, a well-known E-guardian; pepper Huajiao; LEE CHAN, Co-founder of ChinaChic NFT; Aaron, a researcher at Bitget; Henry, Market Head at Hash Epoch; and Cynic, Investment Analyst at CGV. They will delve into the collective driving forces behind Ethereum's rise, the market fluctuations triggered by SharpLink's submission of PIPE documents, and the dominant capital forces and potential explosive tracks within the Ethereum ecosystem, clarifying the real motivations behind the on-chain trend changes and uncovering early opportunities and value gaps worth paying attention to in the new cycle.

You can click to listen to the full replay: https://x.com/i/spaces/1OdKrDRqElwJX

Question 1: What are the main reasons for Ethereum's recent rise? Is there potential for a rebound after the decline?

Kiwi: I think there are several factors behind Ethereum's recent rise. First, there is indeed a reason related to ETF speculation, as many investors have positioned themselves in staking-related ETFs ahead of time, which was a driving force behind the previous main upward wave. Most of these purchases come from Western markets, and the upward momentum lacks particularly clear support, leading to a pullback after the positive news was consumed.

Secondly, from the perspective of chip structure, the large-scale selling of Ethereum by early crypto investment institutions has decreased, indicating an optimization of the chip structure. Although some buyers from previous lows are cashing out, the overall holding situation is still improving.

As for the fundamentals, some people are paying attention to the recent actions of the Ethereum Foundation, but I personally believe that these impacts may only become apparent in one or two years and do not have short-term guiding significance. Regarding futures indicators, many times they are results rather than causes; for example, these indicators were not necessarily effective during the previous Bitcoin main upward wave. Therefore, I do not recommend overly relying on this data.

Yinghao: The most intuitive feeling I have about this round of Ethereum's rise is a sense of "collective force." For a large asset like Ethereum to break new highs, it must rely on the convergence of consensus from multiple aspects, rather than just a single-dimensional push.

In the past few cycles, Ethereum has established a solid foundation in technical narratives, such as positioning itself as a decentralized world computer. At the same time, the application layer has gradually enriched, carrying a large consensus from users and retail investors. However, at that time, there was still a lack of a key factor: recognition of top-level will.

Now, the shift in regulatory attitude towards Ethereum, especially the signals from U.S. regulatory agencies, marks that the top-level will is redefining its asset attributes. This recognition not only enhances market confidence but also creates space for price and valuation reconstruction.

History often rises in a spiral and progresses in waves. We see that from developers to users to policymakers, a true "collective force" is gradually forming. This does not mean that Ethereum can replicate Bitcoin's path, but at least, this is the first time we truly feel the driving force brought by the convergence of multiple powers.

pepper Huajiao: The fundamentals of Ethereum have not actually worsened. The staking volume continues to grow, and the inflation rate remains at 2%-3%, which is overall healthy.

However, from a market perspective, the ETH/BTC leverage on Bitfinex is close to the liquidation line, and the technical weekly pattern is weak, putting short-term pressure on it. Moreover, against the backdrop of geopolitical risks, the decline may exceed that of Bitcoin.

Structurally, Ethereum was initially a "mining machine" model, but it has now evolved into a "splitting model." However, the ecosystem lacks an effective recycling mechanism, and many Layer 2s cannot form a positive cycle, leading to a scattered main market, and the ecological vitality needs to be reactivated. Some sub-markets are restoring the ecosystem through new applications, but the overall structure remains relatively dispersed.

As for the technical narrative, Ethereum has been talking about chain narratives for many years, but what truly brings user experience are products that can be directly implemented. If technical concepts cannot be transformed into intuitive experiences, it will be difficult to continuously attract retail investors.

So, Ethereum is still in the process of rebuilding itself, and a true breakthrough may still require time to refine its structure and repair its narrative.

LEE CHAN: I believe that Ethereum's rebound from $1400 has a clear lag in indicators, and the DeFi compliance and stablecoin narratives that emerged after the rise are essentially chasing the trend. Currently, the volatility in the secondary market far exceeds that of Bitcoin, and retail investors participating with leverage are prone to losses due to severe pullbacks, making short-term operations highly challenging.

At present, there are not many new highlights in Ethereum's ecosystem; the active projects are still the old ones, and it is not as vibrant as Solana, which has new projects every day. I believe the main driving force in this round still comes from institutions, including signals that the foundation is no longer selling and large funds entering the market. In the long run, I believe that during this cycle with Trump, Ethereum has the opportunity to reach new highs. If there is a subsequent altcoin rally, it is more likely that Ethereum will lead, rather than Solana, as Solana's rally cannot drive market sentiment; only Ethereum can lead the overall recovery.

Henry: The recent rise of Ethereum is significantly driven by leveraged funds. The increase in open interest in futures reflects optimistic market sentiment, but essentially it is a premature reflection of price expectations rather than realization. The sustainability of this trend depends on two points: first, whether the spot market can absorb the leveraged selling pressure, and second, whether the fundamentals can support the realization of expectations. If such driving forces are lacking, the market may fall into deep corrections or high-volatility fluctuations, making it difficult for retail investors to enter due to high operational difficulty, thereby weakening the market's faith in Ethereum returning to its peak. As Hash Epoch, a platform built on the Ethereum chain, we focus more on the divergence between on-chain activity and user expectation behavior—leveraged sentiment often amplifies users' enthusiasm for event predictions.

Aaron: I believe that when the market rebounds, funds will always choose to break through in the direction of least resistance—when Ethereum falls to historical lows, selling becomes very unattractive, and once buying pressure surges in, it will create strong rebound momentum. Regarding the increase in open interest, many media or institutions that previously tracked this data did not include some smaller exchanges, so the rise in open interest actually represents a correction in some data.

In addition, there are multiple driving factors behind Ethereum's rise: the Consensus conference significantly boosted market sentiment, and some funds with information advantages have already positioned themselves through high-leverage options strategies. The demand for hedging generated by these options positions directly pushed up the open interest. These factors together contributed to Ethereum's recent price movements.

Cynic: I believe the core factor behind this round of Ethereum's rise is "self-rescue by experts"—early investors who held Ethereum at low prices have deep faith in it, but there may be some issues during Ethereum's transition to POS and the advancement of ZK and Layer 2 upgrades. From market behavior, on one hand, the foundation's layoffs and accelerated engineering implementation release positive signals; on the other hand, experts may leverage operations like MicroStrategy to raise Ethereum prices, forming a "self-rescue" style of increase.

From trading data, the current open interest (OI) has not reached an emotional peak; rather, it is a positive signal—despite high funding rates, there are still a large number of long positions, indicating that real market investment is increasing, and contract trading is mobilizing retail investor confidence. The short-term drop from $2800 is a black swan event impact, but Ethereum's upward cycle has been opened, and such pullbacks are opportunities for those who missed the boat.

Question 2: What do you think about the sharp drop in stock prices after SharpLink submitted PIPE-related documents? What implications does this event have for the future development of the market?

pepper Huajiao: I believe the market's reaction to the PIPE registration documents may have overinterpreted the selling risk—when Joseph Lupin (CEO of ConsenSys) became the chairman of SharpLink Gaming, the company immediately disclosed related documents, and the timing of this coincidence indeed makes it easy to trigger selling expectations.

Henry: Regarding the sharp drop in SharpLink's stock price, it may seem like a small company event on the surface, but I sense a deeper emotional change: the traditional financial market is becoming increasingly sensitive to on-chain data, especially changes in contracts and futures positions on Ethereum.

This indicates a trend—on-chain information will become an important variable for off-chain assets, and the dynamic public disclosure of policies, finances, or positions will be viewed by the market as significant risk signals. This is a key turning point for our Web3 platform.

LEE CHAN: Regarding the reason for the pre-market plunge of this stock, I personally think SharpLink is more like a counter-trend, reverse hunting strategy, essentially aimed at cashing out. Its substantive impact on Ethereum is not that significant, far less than the kind of substantial buying power that MicroStrategy can generate.

After all, "first is first," MicroStrategy, as a pioneer, has already established market confidence, while these later companies are more imitators with limited influence.

Question 3: What is the next explosive track in the Ethereum ecosystem? What early projects are worth paying attention to?

Kiwi: I personally feel that since last year's Devcon, Ethereum's innovation has actually stagnated. After Restaking, there have been no particularly outstanding new breakthroughs. Although many concepts that can be optimized have been proposed recently, there is progress in direction, but these have been mentioned long ago, and we still do not see anything that can be implemented and bring change.

As for market hotspots, Arbitrum's recent Timeboost revenue performance is good, which is one of the few highlights. But overall, these are still not enough to support a major market trend.

So in the short term, I believe Ethereum's technical aspect remains relatively flat, and a true breakthrough will depend on new trends, such as RWA (real-world assets), which will indeed provide significant help to Ethereum.

Henry: In my view, there are three directions in the Ethereum ecosystem that may explode next: first, protocols with on-chain autonomous yield capabilities; second, decision-making infrastructure; third, a service layer that combines AI and smart contracts, which I am currently researching. These three directions share two common points: first, they are built on Ethereum's "second curve"; second, they have verifiable on-chain income, which is particularly friendly to the current high-interest-rate environment and has monetization capabilities.

For example, our platform Hash Epoch is connecting the Web3 community with content producers, allowing influential creators and KOLs to initiate topic predictions and share profits with users, truly realizing "opinions as value, content as assets."

Question 4: In the Ethereum ecosystem, are people more interested in the rise and fall of coin prices or in the future construction of the Ethereum ecosystem?

Aaron: In connection with the previous question, there are three key macro trends in the current crypto market worth paying attention to: first, the GENIUS Act is set to be voted on in the House on the 18th, which will clear obstacles for stablecoin compliance and attract institutional funds; second, the Treasury Secretary predicts that the market value of stablecoins will grow from the current $240 billion to $2 trillion by 2028, with RWA on-chain being the core engine for achieving this growth, and traditional assets like stocks, oil, and gold being tokenized will bring massive incremental funds to the crypto market; third, although Solana is hot due to the MEME ecosystem, Ethereum, with its infrastructure advantages, is more likely to become the preferred platform for traditional institutions to lay out RWA, such as Uniswap's UniChain is expected to become the largest on-chain broker, and AAVE may evolve into a central bank in the Web3 space, establishing the foundational interest rate system for the industry.

In the long run, these layouts will continue to solidify Ethereum's fundamentals, especially in the forward-looking exploration of the RWA track, which may become an important growth pole driving its development over the next four years.

pepper Huajiao: I believe the key to restarting Ethereum at this stage lies in the RWA trend, which essentially solves the capital retention problem through the logic of "picking the head"—"locking in" through mechanisms like Staking and LST, "cutting the tail" relies on delayed satisfaction and penalty mechanisms to constrain liquidity, while "intermediate flow" depends on capital retention designs like compound rewards.

The past DeFi nesting doll model has failed, leading to the loss of support for the underlying logic of the Ethereum ecosystem; the splitting model has also fallen into a dilemma due to the lack of a sustainable blood-making mechanism. The rise of RWA offers another path—it maps traditional assets like U.S. stocks and real estate onto the chain, leveraging Ethereum's decentralized characteristics to become a channel for cross-border capital flow. Especially for the wealthy in underdeveloped countries, this method is equivalent to bypassing the traditional financial system and converting assets into dollars, allowing the crypto industry to return to the anonymous payment and hedging logic seen in Bitcoin's early days on the "Silk Road."

Cynic: I believe the core of the SharpLink event lies in the fact that people are not buying into its narrative. When the market is good, even if there are cash-out operations, the market reaction will be more tolerant; but now, with the overall weakness and the altcoin sector feeling anxious, any slight disturbance can easily trigger panic selling. This is also the current dilemma for altcoins. In contrast, Bitcoin has "uniqueness," and people are willing to treat it as a safe-haven asset. But what about Ethereum? I think the gap between it and other altcoins in terms of market confidence is not as large as imagined.

Of course, Ethereum's biggest advantage remains DeFi and TVL, with no real competitors among public chains. But the problem is—if traditional finance really wants to engage in RWA or on-chain finance, it may not directly connect to Ethereum and might choose to launch its own chain, which may not be beneficial for Ethereum in the long run.

However, at the current stage, Ethereum is still the biggest beneficiary of stablecoin and RWA narratives. If we look at the altcoin direction, it remains the most noteworthy mainline target.