On May 24, BlockBeats and OKX BlockBeats held a Space event with the theme of "Ethereum spot ETF approved, the altcoin season ushered in the 'accelerator'". Guests included Kiwibig.eth of OKX Ventures, senior crypto trader KOL Unicorn, and J Labs's founder Jian Shu, who shared their interpretation of the impact of the Ethereum spot ETF approval event and their views on the market outlook. The following is a summary of the text of this X Space:
BlockBeats: Thank you all for coming. Although we are all acquaintances, please let each guest briefly introduce their selves.
Unicorn: We are all old friends, and I am very grateful to BlockBeats and OKX for the invitation.
Uncle Jian: I used to focus on airdrops, but this year I am particularly optimistic about the development of blockchain games, so I set up a research institute specifically for this purpose, hoping to communicate more with everyone.
Kiwi: I am from OKX Ventures and am a researcher in the primary market, focusing on the analysis of fundamentals and industry tracks.
BlockBeats: What opportunities do you think the Ethereum ecosystem will have in the second half of the year that are worth paying attention to? What tracks and directions are promising?
Unicorn: We can see that after the Bitcoin spot ETF and Ethereum spot ETF were approved, the prices of Bitcoin and Ethereum have been rising. Some other star projects can only barely keep up with the increase in Bitcoin. Some projects need to be particularly excellent in all aspects to surpass the increase in Bitcoin.
In fact, the cycle of Bitcoin's rise in the past has been relatively long. If we follow the rules of the previous bull market, after the halving of Bitcoin, Bitcoin will rise first, and then be transmitted to Ethereum. Ethereum will rise, and the rhythm behind it is the take-off of the cottage. Let me first talk about the trend logic of the overall market, or the logic of the bull market. In fact, I think the subsequent performance of the Ethereum ecosystem is closely related to the logic of the bull market. This is the rule of the previous bull market. The logic this time is still a little different from the past. This has never happened before. Bitcoin has hit a record high, and a large number of Altcoin are only 30% to 50% away from the low point, or even closer to the low point.
There may be two reasons. The first is that when the project party raised funds in the past, they directly raised Ethereum and Bitcoin. Therefore, with the rise of Bitcoin and Ethereum, the assets in the hands of the project party appreciated along with the overall market.
However, in this round of bull market, a large number of projects have started to raise USDT, but not Ethereum. Some project owners are unclear about the overall funding plan and do not allocate Ethereum, which leads to the fact that when the project wants to manage the market value, it is found that the amount of funds cannot anchor the increase of Ethereum. On the other hand, in previous cycles, the main funding channels are centralized exchanges and DEXs. When Bitcoin or Ethereum rises, it is easy to transmit to Ethereum's ecological currency, because the profit funds withdrawn from Bitcoin and Ethereum can be quickly transferred to other ecological currencies.
Ethereum's spot ETF has not yet been officially listed. After it is officially listed, it will most likely replicate the rhythm of Bitcoin after its listing, but the increase will not be as rapid because the market has digested a lot of advance expectations. However, due to the inflow of funds, the price of Ethereum will still rise.
The SEC's approval of the Ethereum ETF, whether it is a rat warehouse or a speculative disk, institutions will sell their products to make profits in the near future. The corresponding period of time may be a state of volatility for Ethereum. Later, Grayscale's Ethereum will be involved. Grayscale will sell Ethereum, and then other ETF institutions will take over. The amount of other ETF institutions taking over is large, far exceeding Grayscale, and then the corresponding net inflow of funds from Ethereum will push up the price of Ethereum, so I think it is a state of volatility in the near future. Then in the long term, with the continuous inflow of funds from ETFs, the situation of Bitcoin's ETF will be replicated. Therefore, the probability of Ethereum setting a new record high is still very high. After experiencing the previous rounds of bull markets, the general rise of all Altcoin is gone forever.
I think the whole industry may have a rotation game in the future. In a certain period of time, there is a star track or a star project, which attracts great attention and has a very high increase. In fact, the increase in rotation can already be seen now. It is the increase in rotation game, not the general increase. For example, meme coins are actually far ahead in the rotation. Some time ago, based on the popularity of the global AI concept, the increase in AI tokens was also very fierce. A few years ago, I saw the FET token. The technology of this project is very good, and the product is also good. Because it is an AI concept, I accidentally discovered that FET has increased by so many times.
In short, I think Ethereum will go through a period of volatility after the recent speculation or insider trading, and then a rising period. Later, as funds continue to inflow, it will hit a record high. However, I don’t think the tokens in the Ethereum ecosystem will rise on a large scale like the past two rounds. There will be a rotation game situation, star projects will attract market attention, and prices will be able to rise rapidly.
Uncle Jian: I am optimistic about the trend in the second half of the year. Especially after the Ethereum ETF has greater certainty, the market in the second half of the year is even more worth looking forward to. So I think we should focus on the development of the entire Ethereum ecosystem in the second half of the year.
In fact, in the first half of the year, Ethereum has been filled with pessimistic sentiments. In the group, you often see Ethereum ecosystem tokens not rising, projects are rubbish, etc. The sentiment is relatively negative. In comparison, Solana's ecosystem performance will be more eye-catching.
Until two days ago, there were rumors that the Ethereum spot ETF was going to be approved. It soared 20% in one day, and everyone's confidence returned. Whether the currency price is strong or not largely determines everyone's confidence in the Ethereum ecosystem. Therefore, only when everyone has sufficient confidence will more people be willing to make more contributions to the ecosystem. The entire ecosystem will have more high-quality talents joining, and there will be more sufficient capital inflows. Therefore, I think the approval of the Ethereum spot ETF has played a role as a booster, bringing more confidence to the builders of the entire Ethereum ecosystem.
So I also believe that more high-quality applications may emerge in the second half of the year. In fact, I have always been optimistic about the development of Ethereum, whether it is its technical ecology or Vitalik's future plan for Ethereum, and even a series of problems that have appeared before, such as network congestion and high gas fees, which have gradually found some solutions. In addition, Ethereum itself has a strong consensus foundation, a large number of users and many high-quality projects, and a very good foundation, so I also think it is worth looking forward to.
Of course, there is also a problem that needs attention. In the short term, the entire market will not rise strongly immediately, because the strong rise of the market must rely on the entire capital pile. What the crypto lacks most now is actually capital. If there is insufficient capital, the liquidity will be poor. We also found that the sector rotation in this bull market is indeed particularly obvious. We have not seen the scene of thousands of coins flying together. When BTC rose sharply, most of the other sectors were stagnant, and even many Altcoin have repeatedly broken new lows. The core reason may be that the entire capital has gone to BTC. When BTC has risen almost enough, the funds will rotate to sectors such as AI, meme, and DeFi.
In the short term, funds are still in a state of severe shortage, and the market will still be dominated by fluctuations, but in the long term, the market will definitely go up. Therefore, the Ethereum spot ETF will gradually promote the entire Ethereum ecosystem.
Kiwi: I recently saw media mention that the Ethereum Foundation has no dreams. This should be some disputes between Justin Drake and several other leaders of the Ethereum Foundation. I think this is indeed a good feedback for internal governance. The governance of the Ethereum ecosystem has always been very exemplary in the circle, but at the same time, there is indeed a problem of centralization in governance.
The second is that after the Cancun upgrade, everyone believes that Ethereum's gas fee will be reduced. The reduction in gas fees is indeed a major benefit brought by the Cancun upgrade, which can allow more L2 to come in. At the same time, the reduction in gas fees will promote the development of more L2 and L3. One thing worth paying attention to in the second half of the year is L2. Everyone still remembers that in the last cycle, Polygon actually started to develop the ecosystem after listing the coin, and then began to spiral upward.
Arbitrum will now use a lot of funds to build the ecosystem, so the ecosystem with Arbitrum and OP is very good, in fact, it is a positive cycle, their ecosystem will start to build slowly after the coin is listed. The other two L2s have not yet formed a positive cycle, such as scroll or Taiko, or Starknet.
I think other L2s are also on the way, such as various NFT L2s, AI L2s, and Depin L2s. Although Ethereum expansion may be a negative in the short term, it will promote the development of more L2s in the long run. In addition, the Ethereum Prague upgrade is an upgrade that fixes small patches. The next major upgrade may bring Verkle Tree, which is to change Ethereum's Merkle tree to Verkle Tree, which will further reduce the occupancy of Ethereum's state and its storage space nodes, further decentralizing it. This is an innovation point that is worth paying attention to.
In short, no matter what problems the Ethereum Foundation faces in the short term, I am very optimistic about Ethereum in the long term, not only from the perspective of funding and fundamentals. Ethereum has been holding hackathons continuously.
BlockBeats: What do you think of the role of the Ethereum Foundation in the Ethereum ecosystem?
Unicorn: When Ethereum was more than $10, the Ethereum Foundation continued to ship Ethereum. Judging from the public address, Vitalik does not hold as much Ethereum as Justin Sun. From the perspective of the Ethereum Foundation, I understand. The Ethereum Foundation is not as extreme in pursuing money as Justin Sun and SBF. They are more pursuing dreams.
It cannot be denied that Bitcoin has ignited a fire in the crypto, but Vitalik and the Ethereum Foundation have made blockchain not only a value storage function, but also a variety of applications that can be developed on the chain. Ethereum first proposed the concept of smart contracts, allowing everyone to issue coins on it, and the ecosystem is constantly iterating. The Ethereum Foundation is not so smart, not so hurtful, not so fierce in speculating on coins, and not so big in pattern, but it puts a lot of energy on ecological development. In other words, if the Ethereum Foundation's pattern is big enough, then they must have a lot of chips now, and the market value of Ethereum today or all aspects may not be as prosperous as it is now. So I think they have a small pattern, they don't have such a big dream, and they sold coins quite early.
Uncle Jian: I feel that the overall impression of the crypto is that it is rather impetuous. However, the members of the Ethereum Foundation will not seek profits from their own interests. They hope that the entire ecosystem can develop well and truly solve some industry problems or bring real value to users.
BlockBeats: After the Ethereum ETF was approved, the market has begun to look for the next ETF target. Currently, SOL is the most talked about one. Do you think it is possible? Or are there other targets?
Unicorn: It is not difficult to predict. By the process of elimination, the probability of SOL (ETF) passing is quite high. Because Bitcoin and Ethereum have been listed on the Chicago Mercantile Exchange (CME) for a long time, they are the only two assets in the entire Crypto field that are listed on CME. In addition, the popularity of SOL itself and its audience overlap with those in the United States. The SEC should also take care of the interests of Americans themselves, so I think the possibility of SOL (ETF) passing is quite high.
But it is not the only option. Some overly centralized tokens, as well as tokens that have had disputes and conflicts with the SEC or the government in the past, have little hope of passing. For example, Ripple, although it is very old and has a high market value, its chances of passing are not very high. And Tron, Justin Sun's personal symbolism is very strong, and it is highly unlikely to pass. In addition, the platform tokens of exchanges will also not pass.
There are also some meme coins. According to the SEC’s standards, if you want to list meme coins, DOGE should be the first choice, but this may bring a carnival to people in Musk’s faction. So I think the SEC is unlikely to do so.
I think some new projects will not be approved. TON, which is very popular recently, will not be approved because the concentration of chips is too high.
I think there is a high probability that some projects that have been washed out for many years, have a high degree of dispersion of chips, have a relatively good consensus, and are recognized as securities with very low risk will be listed. But I am an old leeks, and my thoughts will be guided by the thinking of old leeks. So correspondingly, for example, old public chain coins such as BCH and SOL, the probability of SEC approval is still very high.
Uncle Jian: I did a vote on X. The first option was SOL, the second option was BNB, and the third option was old coins like BCH and LTC. The last option was MEME coins like DOG and PEPE. As expected, the number of people who voted for SOL accounted for the highest proportion, reaching 63%.
In short, the consensus and demand for SOL are indeed strong, but a big problem at present is that the SEC has directly stated that SOL is a security. At present, only tokens that are considered non-securities by the SEC are more likely to pass the approval of ETFs. So this is more mysterious. Unless the attitude of the SEC changes later, the application of SOL ETF will definitely be very bumpy. On the contrary, I think Polkadot's DOT has a certain possibility. Of course, it is definitely not good at this stage. The biggest problem is that the consensus is not enough. But the advantage of DOT is that it is the only token recognized as software by the SEC. Its problems in terms of user base consensus and capital volume are not unsolvable. With the development of the later ecology, there is still hope for a resurgence. So I think DOT has certain potential.
Kiwi: My own feeling is that SOL actually has a strong demand from the user side, but because the SEC has previously said that it is not a security, I think even if it passes, it will go through a very long struggle.
BlockBeats: Actually, the altcoins haven’t moved yet. Will the altcoin season come back? The funds from Bitcoin ETFs haven’t come to the crypto, but will there be any difference this time?
Unicorn: I mentioned a term called "rotational game" earlier. In the future, whether it is the coins in the Ethereum ecosystem or the overall Altcoin, the situation of a general rise of all coins will most likely not be seen again, and a "rotational game" situation will occur. Why? Because there are so many projects now, and they are mixed. The entire Crypto has developed to a lot of ways to play. When I first entered the circle in 2017, the crypto ecosystem projects were relatively limited, and in the early days I was focusing on large public chain tokens such as Bitcoin and Ethereum.
Up to now, although a large number of new users have come in, the number of categories and tracks of various concepts including AI, games, DeFi, etc. is incomparable to before. There are so many projects, but there is no capital coming in on the same scale. Large funds still tend to prefer opportunities with certainty, so liquidity has been absorbed by projects with higher certainty. This results in most projects not being able to easily achieve large gains like in the last bull market.
Another reason is that the FDV of new projects is relatively high. How high is it? When I was browsing X today, I saw a foreigner who counted the tokens launched from 2024 to date. The average circulation rate (current circulation divided by total supply) is only 14%.
This number is in line with everyone's expectations. According to this value, in just less than five months this year, there are 70 billion US dollars of tokens waiting to be unlocked. There are also projects in 2023 and 2022 waiting to be unlocked. A large number of tokens to be unlocked will bring great selling pressure to the market.
So I think everyone should really pay attention to FDV. It is possible that a project will encounter a very embarrassing situation. The project ecosystem is doing well, the overall valuation and liquid market value have been rising, but the coin price has not risen much. This is because the tokens unlocked by the project have been generating new selling pressure.
The third point is the capital path. A lot of money flows in through spot ETFs, but it is difficult to transfer this money to other Altcoin instantly. So it leads to the situation of "rotational game". But I think this round of bull market is still very lively. If you keep guarding a coin and wait, if the team, main force or community of this coin is still constantly building, then the project still has hope.
For some coins, their project parties and even communities no longer exist, which is quite uncomfortable. As an old investor, I will give you an example. During the last bull market, Bytom was still very good, but there was even a rumor that Bytom was going to shut down mainnet. So if you want to invest in a project, you must follow the pulse of the entire market now. At the beginning of the year, Inscription brought about other derivative projects in the Bitcoin ecosystem, and then the meme coins on SOL rose. The next one should be the meme coins on the Base chain, including the re-staking in the middle. In fact, there are still many opportunities in the process. These opportunities actually lie in the fact that there is no way to bring about a general rise in all coins in the entire market, but if there is a hot spot, the corresponding funds will gather in a certain track or a certain asset, and the corresponding performance is still very good.
Uncle Jian: I personally tend to believe that the alt season will come. I think everyone should have sufficient confidence in the market. In this round of bull market, Bitcoin will not be the only one that is crazy. The key is when will the alt season come? I think there are many factors to consider here, and it is not that any single factor can determine that the alt season will definitely come. But I think we can simplify the logic of thinking. If the alt season is to come, what are the most critical prerequisites? I think it is mainly the three factors of people, time, and funds. In other words, there must be enough people, enough time, and enough funds. There is a strong correlation between these three. The factor of people is actually easier to understand. That is, more people need to pay attention to the market and let more people really participate in it, so that they may be more interested and more confident to trade in the market. Where do these people come from? In fact, there are many ways. For example, the passage of Bitcoin and Ethereum ETFs will inevitably make more people outside the circle want to understand our circle. This not only brings new people, but also brings a lot of funds. For example, some very influential events, such as Trump and Biden coming to the crypto circle to canvass votes, will also attract more outsiders to pay attention to the entire crypto market.
Another track I am looking forward to is blockchain games. I think games are the easiest way for outsiders to enter our circle. However, we still need to wait for the emergence of a super popular blockchain game.
Why is time also a critical factor? Because it has a lot to do with our risk preference when making investments. For example, someone outside the circle suddenly comes to you for advice on how to invest in the crypto and what to invest in? I think most people would recommend BTC first. Because BTC has the strongest consensus and the risk of zeroing out is relatively the lowest. After he has a certain understanding of the circle, he will have more needs to understand other ecological currencies, and then we may recommend some Altcoin. From such an example, it is a very normal process of capital flow, that is, first to BTC, and then to other altcoin pools, so this matter itself requires a certain period of time.
So what stage are we in now? Now we are in a stage where we don’t have enough people, money, and time. So I think as an ordinary retail investor, what we need to do is to wait patiently for the arrival of the entire cottage market. Now that Bitcoin ETFs, and even Ethereum ETFs can be traded later, they can not only solve some of the funding and personnel problems, but I think they will also accelerate the process, so everyone just needs to wait patiently. If it’s fast, it may be in the second half of the year, and if it’s slow, it may be early next year, which is the main rising wave of the entire cottage season.
Kiwi: I also think that the copycat season is relatively certain. It is true that, as Uncle Jian said just now, neither people nor funds have come in, but I think these two problems will be solved slowly. On the user side, games, AI, and the TON ecosystem, I think these are all worthy of attention. At the track level, I think the first thing is that games can still bring a lot of users to the industry, and the quality of games in this cycle is much better than the previous cycle. I remember that many institutions invested in a lot of 3A games in 21 years, and they have been delivered in batches recently. Although there are many scams, there are still many good projects that can bring traditional players in, and the wallets and various experiences are also better. And like Telegram, which is more portable and stable, there is a large user base. In addition, there is the Bitcoin ecosystem, with many new people coming in, and various means of attracting new users are still emerging in an endless stream.
I think in this cycle we really need to see some stories with real fundamentals and mass adoption. Although the term mass adoption has been overused, I think if the industry really wants to develop in the long run, mass adoption is still essential. Finding projects that will really stick to their work, acquire users, and then win the market, these simple principles are actually the most important.
BlockBeats: Let's go back to Bitcoin for the next question. The market has not been very good in the past two months, mainly because Bitcoin has been volatile. So after the Ethereum ETF is approved, do you think Bitcoin will reach $80,000 soon? What do you think about the subsequent market conditions?
Unicorn: My view is relatively simple: Don’t use your ideas, abilities, and opinions to challenge absolute power. Just like the Ethereum spot ETF has suddenly shown signs of passing in recent days, and then it was suddenly passed, and the price rose to $3,700, and the highest should be more than $3,900. In fact, it was caused by the SEC’s decision. I think the price of Bitcoin exceeding $80,000 also depends on the Federal Reserve. If the Federal Reserve uses its power in the future and there is an expectation of interest rate cuts, then Bitcoin will reach $80,000 very quickly.
On the contrary, if the Federal Reserve recently stated that it is necessary to maintain high interest rates, it will be more difficult for Bitcoin to reach $80,000. I think the price of Bitcoin is indeed related to the ecological prosperity of the crypto, but the relationship is not that big, and it depends more on the macro situation.
Uncle Jian: I think it is very difficult to predict the price. I think the rise of Bitcoin price will be affected by many factors. Especially now that the entire Crypto market is seriously short of funds, the recent market will still be dominated by oscillating upwards. In other words, the overall market still needs to go through a long period of oscillation and adjustment. Only after the period is over, there may be a relatively large opportunity for unilateral rise.
But the biggest worry for the entire crypto is some unpredictable black swan events, even wars, and macro-level data impacts, which will make the entire market very fragile. Any factor may cause the entire market to fall, and every fall in the market may cause the entire market to enter a new adjustment cycle, which lasts for half a month. So I think the time cycle will not be as fast as expected, and the price of Bitcoin will not reach $80,000 so soon.
Kiwi: I think price is also a very difficult topic to predict. Even the best investment institutions or KOLs cannot predict price. I think the increase in Bitcoin price in the past two months is due to the realization of expectations, and then there are some new expectations. I think the price still needs to look at the long-term trend. It is difficult to predict in the short term. We have always focused on fundamentals. It is better for everyone to wait patiently.
BlockBeats: There are many new projects in this cycle, and old projects are still alive, so do you teachers have any tracks and projects that you are particularly interested in?
Unicorn: Let me first make a guess, and then talk about the state of the Chinese Internet era. In fact, the Chinese Internet was also a state of competition at the beginning, and then Alibaba, Tencent and other large Internet companies gradually occupied the top of the food chain, and then some small and beautiful vertical tracks were derived, and these small and beautiful vertical tracks also have many opportunities.
A similar situation has also occurred in the Crypto field. For example, Bitcoin and Ethereum are already in a monopoly state. Avalanche, which used to be a public chain, has relatively less momentum in this round. Of course, Solana is still very powerful, and the current activity of the SOL ecosystem is unprecedentedly high. So in my opinion, if the top track stands firm, the small and beautiful vertical tracks below still have opportunities. For example, when everyone was competing in the L2 track, Tieshun started to focus on the staking track Blast. Although Blast is not only focused on staking, the initial concept was to build a vertical track.
Although the big picture has been determined, there are still many opportunities in the vertical field in the future, such as public chains customized for the game track and public chains customized for DeFi, so the entire ecosystem will be more suitable for this track. I think this kind of project will be able to create a new track in the future.
Uncle Jian: For personal investment, the specific investment target has a lot to do with one's own profit expectations. AI is definitely the main theme this year. Whether it is Web2 or Web3, there will be a lot of room for hype. Another thing is meme, which is "early to win people over", and this round of bull market must be paid attention to. There is no particularly strong hit in the blockchain game sector yet, but we also need to continue to pay attention to the outbreak time of the blockchain game track.
There are many currencies in each track, and the projects are mixed. So my suggestion is to choose the leader first. The strong will always be strong, which is also very applicable in the crypto. In addition, you should look for currencies with relatively larger room for growth and stronger. How to judge whether a currency is strong? You can look at the strength of the currency's callback when the entire market is pinned. If the rebound is relatively fast, this currency is relatively strong.
Kiwi: I am more concerned about the primary market, which may be a bit far from the actual transaction. Many of the projects we are concerned about have not yet been launched in the secondary market. I personally prefer two core trends. The first is real technological innovation, and the second is the ability to bring in new incremental users . Regarding technological innovation, everyone thinks ZK is already rotten, but ZK still has some innovative points, such as the aggregation of ZK Proofs, which is quite interesting. There are also some interesting things in decentralized scientific research, because scientific research is also a very large market.
Game ecology, Bitcoin ecology, and TON ecology are all worth paying attention to. Speaking of Telegram, Telegram has 1 billion users. Last year, at a Telegram event, I heard that they hoped that the number of TON users could reach 10% of Telegram, which is 100 million MAU. If converted into industry transaction users, this is also a large scale. TON's goal is to achieve 500 million MAU, so I think the TON ecology is worth paying attention to. In addition, DePin and the mobile phone field can also be paid attention to.
Each ecosystem of DePin has launched a mobile phone, such as Solana, Aptos, and many new mobile phones are about to be released. Mobile phones are actually an important tool for KYC user authentication. So no matter which track it is, as long as it can bring real users to the blockchain, it is a good track.
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