Source: Talk Li Talk Outside
In January 2021, ETH broke through the previous high of $1,400 (January 2018), and after a brief adjustment of less than two months, it entered a rapid upward mode, reaching a high of around $4,400, which was also a year after the third Bitcoin halving.
From the past cycles, the rise of ETH often lags behind BTC, which is quite normal. If history can repeat itself, we can expect that in the first quarter of next year (2025), ETH may start a real upward trend.
As of the time of writing this article, the price of ETH is close to $3,900, which seems to be a relatively good new starting point. Let's see if it can stabilize 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 start from the $800+ in June 2022, the price of ETH has increased by about 5 times so far. And if nothing unexpected happens, maybe next year we may see ETH above $5,000.
Next, let's continue to simply sort out what we need to focus on from a macro perspective, or what other positive factors ETH has:
1. The Federal Reserve's interest rate cut cycle
According to the dot plot released in September, the Federal Reserve's interest rate is expected to decrease by about 2% within two years from the current 4.75%. 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 the change in global liquidity, a portion of funds will inevitably flow directly or indirectly into the cryptocurrency market.
2. Inflow/outflow of ETH ETF funds
Currently, more than 28.5% of ETH tokens are in a staked state (as of the time of writing, there are 34,292,149 ETH 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 affecting the price trend of ETH. Once more funds (liquidity) start to flow into Ethereum on a large scale, it will inevitably further promote the development of the Ethereum ecosystem (DeFi ecosystem, L2-related ecosystem, etc.), thereby further increasing the relevance and demand for ETH tokens.
Now ETH is the only cryptocurrency other than BTC that has been approved for ETFs, and based on the recent capital dynamics, ETH ETFs are continuously generating positive inflows. As shown in the figure below.
According to data monitored by lookonchain, in the past month, 9 Ethereum ETFs have significantly increased their ETH holdings, with a total of 362,474 ETH (about $1.42 billion), an increase of 4,363% compared to the previous 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 season trends. Generally speaking, if you find that ETH is starting to outperform BTC in exchange rate value, this is a strong sign that the market's interest in altcoins is rising rapidly, and funds are flowing into altcoins in large quantities. From the current trend of the ratio, it has basically reached the relatively bottom range, and the MACD indicator has also shown signs of rebound. As shown in the figure below.
4. Continuous accumulation by whales
Currently, the amount of ETH controlled by ETH whales has increased by more than 30% compared to a year ago, and the top 200 Ethereum wallet addresses now hold a total of 83.69 million ETH. As shown in the figure below.
Over the past year, BTC has continued to set new historical highs, while ETH has always maintained a certain distance from its ATH. However, whales have been continuously accumulating ETH, while retail investors have been cursing 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 including two parts: the Prague (Prague) execution layer upgrade and the Electra (constellation name) protocol layer upgrade.
Although the Pectra Upgrade currently does not seem to have a standout target, it is more focused on account abstraction, smart contract efficiency, verifier improvements, Verkle tree to improve data management, second-layer solutions, and PeerDAS, etc. But we expect that through a series of technical improvements and optimizations, the Ethereum network will become faster, transactions will be cheaper, more scalable, and easier to use. At the same time, the market does not rule out the possibility of another round of hype around this upgrade.
For more information on the Pectra Upgrade, interested friends can directly use Google or ChatGPT to search or learn more.
In summary, regarding Ethereum, we still maintain the view expressed in our previous article: as a coin without unlocking and miner selling pressure, as the altcoin king, as the largest cryptocurrency ecosystem, as the only cryptocurrency other than BTC that has been approved for ETFs... we should still have a more optimistic attitude towards the future development of Ethereum. If most people are FUDing Ethereum, it means that this is precisely the time you should continue to increase your position.
Note: The above content is just a personal perspective and analysis, and is only for learning and exchange, and does not constitute any investment advice. Any projects or websites mentioned in the article are not directly related to Talk Li Talk Outside (Talk Li Talk Outside does not accept any advertising from project parties), please evaluate the security of the corresponding projects or websites yourself. Investment always has risks, don't get into what you don't understand, and don't play what you can't afford to lose.
