How do you view the industry development changes after the adoption of the Ethereum ETF? Let’s talk about the conclusion first: In my opinion, the market will usher in a longer “copycat” season, and the bull market Bull Run is about to begin, but the process will not be so beautiful .
Why? Next, let me talk about my personal observations:
The value of Ethereum lies in the ecosystem
1) The market response after the adoption of the Bitcoin ETF was not as huge as expected. The raging mad bull that everyone expected did not come as expected, but it is obvious that the volatility of Bitcoin has reduced, and the market’s ability to undertake it is getting stronger. The mysterious power of Wall Street has become everyone’s “bottom guarantee” for the stability of Bitcoin.
Because the pure asset attribute of BTC lacks a complete ecological support behind it, the secondary market expectations of BTC seem to be out of touch with the primary market that everyone is building. In the short term, the "gain" effect of BTC on the market cannot be extended to the primary price. The correlation with the investment market, especially the Lego ecological market of mainstream Ethereum, is even weaker.
Extended reading: Analysis》5 major reasons why Altcoin have not exploded yet. How to optimize investment strategies?
However, the passage of the Ethereum ETF is very different? On the one hand, the deflation of ETH will directly affect the activity of the primary market. The price of Ethereum will increase, and the advantage of low layer2 gas will be highlighted, which will indirectly drive the development of the layer2 market. The reduction of Ethereum circulation will intensify the interest-earning competition between Restaking and AVS. The involution of the market will drive value growth, and Ethereum is in the hands of incremental funds and is used to invest in and support top-level compliance DeFi projects, etc.
If this example seems far-fetched, in fact, you only need to understand that the current value of Ethereum is gradually generated by this huge primary Build market. On the contrary, ETH’s own asset price and circulation audience will also bring sources to the industry ecology. Constant users, funds, talent resources, etc. This is the fundamental reason why Ethereum ETF will relatively promote the arrival of "copycat season".
Is copycat season coming?
2) The "copycat" coins mentioned here, I would rather refer to, are those with VC support and team build. The market did not receive high attention when the token was not issued. After the token was issued, the currency price collapsed and there was no value support. The "mainstream currency".
Simply put, the approval of Ethereum ETF can attract mainstream funds to pour into the huge ecosystem built by Ethereum and drive the continued growth of value coins. (Whether we can break the curse that the value of coins is not as good as MeMe coins can be solved in one fell swoop.)
Extended reading: Meme coins are rushing ahead but the copycat season is not coming. Why don’t retail investors and institutions take over each other’s orders?
However, the ideal is beautiful. It is not easy to let mainstream funds flow into the ecosystem and drive the Web3 entrepreneurial ecosystem. The passage of the Financial Innovation and Technology Act for the 21st Century, referred to as FIT21, passed by the U.S. House of Representatives is very informative. The bill clearly proposes to provide key consumer protections and promote innovation in the U.S. digital asset ecosystem. Let’s briefly explain:
1. The CFTC and the U.S. Commodity Futures Trading Commission have greater regulatory powers. Digital virtual assets will be more flexible and free to regulate under the "commodity" attribute. This is the basis for long-term "stability" and less variability in the policy end;
2. "Compliance" will become the main theme of the development of Crypto's digital ecosystem, including the construction of institutional systems such as processes and standards for issuing assets, which means that the virtual asset ecosystem will be divided into two extremes:
Those that cater to compliance will gradually find solutions to key issues such as KYC and anti-money laundering, and will directly receive ETF gain buffs. Those that do not cater to compliance will be subject to increased sanctions and crackdowns, and will gradually fall into the niche market (for example: Tornado ); still remember that in 2021, when the wave of institutions entered the market, we defined the market as the first year of compliance. However, the unexpected occurrence of the FTX and Luna incidents delayed this long-cherished wish. With the approval of ETFs, "compliance" issues will still have to be faced.
3. The U.S. government or plutocrats will strongly "intervene" in key areas such as stablecoins, exchanges, digital asset custody institutions, and payment platforms. The probability of direct direct stablecoins in the short term is low, but it does not rule out indirect issuance of licenses. Be the behind-the-scenes controller in other ways.
Extended reading: Interpretation of the US "FIT21 Cryptocurrency Act": Impact on the Web3 World in the Next 10 Years
predictions about the future
3) If the above conjecture is correct, it can be predicted:
In the short term, the Crypto secondary market will be divided into two levels. Some behind-the-scenes dealers will increase their efforts to speculate before the introduction of a series of regulatory bills. MeMe coins and some mainstream coins will have high volatility, and copycats will dance wildly ;
In the medium term, some top DeFi, stablecoins and exchanges will increase their compliance efforts . Value targets with good compliance orientation will have good market performance, while the opposite will be the opposite and will gradually lose value support;
In the long run, the political overtones of Crypto will drive the encryption market to gradually cater to the taste preferences of the Web2 market . This may disappoint some fundamentalists who adhere to a high degree of decentralization. However, expecting the policy to bring benefits and being rubbed by the policy are the two sides. Bladed sword.
Web3 native is not an umbrella for fraud and money laundering in the name of decentralization. Under the big stick of compliance, people and communities are divided, and product hierarchies are the general trend. Crypto has some very complex technologies and protocols, and supervision is difficult to control, but the market We will only support the most mainstream development route. (The choice actually lies in the market.)
In short, it is either the last hurray of speculators, a little pressure from the regulatory sword, or the loss of speculators after high volatility is restrained, etc. Everyone has their own vision for Crypto development.
Overall, the Crypto market driven by politics will no longer maintain the original dream of pure "decentralization", but it will allow the Crypto market that has developed chaotically for many years to eliminate the dross and give mainstream value coins the possibility to shine. .
