Chainfeeds Summary:
For the foreseeable future, Ethereum's monetization process will remain dependent on Bitcoin, unless Ethereum can achieve a low correlation and low beta coefficient with Bitcoin over a longer period.
Article source:
https://x.com/AvgJoesCrypto/status/2001125280719544488
Article Author:
AJC
Opinion:
AJC: As of November 30th, ETH has fallen from its August high to $2991, significantly lower than the previous cycle's all-time high of $4878. ETH's position has improved significantly since April, but the structural problems that initially fueled the bearish sentiment have not been eliminated. On the contrary, the debate surrounding ETH is more intense than ever. On one hand, ETH is exhibiting many characteristics that BTC showed during its monetization process: ETF inflows are no longer weak, digital asset vaults are becoming a source of sustained demand, and more and more market participants are beginning to view ETH as an asset distinct from other L1 tokens, incorporating it to some extent into the same monetary framework as BTC. On the other hand, the opposing factors that pressured ETH earlier this year remain. Ethereum's core fundamentals have not fully recovered; its L1 fee share is still being squeezed by strong competitors such as Solana and Hyperliquid, and on-chain activity levels are far below the previous cycle's highs. Even during ETH's strongest phase, BTC remained firmly above its all-time high, while ETH failed to return to its previous high. In fact, many holders chose to use ETH as an exit liquidity tool during the rebound, rather than as a confirmation of the long-term monetary narrative. The core issue in this debate is not whether Ethereum has value, but rather: how exactly does ETH derive value from Ethereum's success? In the previous cycle, the market generally assumed that ETH would directly capture value from Ethereum's success, a key component of the "ultrasonic money" narrative: Ethereum would burn large amounts of ETH due to its high usefulness, thus providing a mechanized, mandatory source of value for the asset itself. However, we can now say with considerable certainty that this has not happened. Ethereum fees have fallen sharply and show no clear signs of recovery, while its largest growth comes from RWA and institutional users primarily using the US dollar, not ETH, as their base currency. Therefore, ETH's value will depend on how it indirectly benefits from Ethereum's success. But this indirect value capture is far less certain than a direct mechanism; it relies on the assumption that as Ethereum becomes more important at the system level, more users and capital will choose to view ETH as both a cryptocurrency and a store of value. This mechanism is not inherently flawed (after all, so is BTC), but it means that ETH's appreciation is no longer definitively tied to Ethereum's economic activity, but entirely depends on social preferences and collective beliefs. This also highlights the core tension of ETH: while ETH may be gaining a monetary premium, this premium remains behind that of BTC. The market still views ETH as a high-beta expression of the BTC monetary narrative, rather than an independent monetary asset. Throughout 2025, the 90-day rolling correlation coefficient between ETH and BTC remained in the range of 0.7–0.9, while its rolling beta rose to multi-year highs, even exceeding 1.8 at times. ETH's volatility is significantly higher than BTC's, but it remains highly dependent on BTC. This is crucial: ETH's current monetary correlation is built on the continued validity of the BTC monetary narrative. As long as the market believes BTC is a non-sovereign store of value, a small segment of participants will be willing to extend this belief to ETH. If BTC continues to strengthen in 2026, ETH will have a relatively clear path to catch up. Ethereum DAT is still in its early stages, currently accumulating ETH primarily through common stock financing. In the next bull market, these entities may explore more capital structure tools, similar to how Strategy expanded its BTC exposure, including convertible bonds and preferred stock. For example, DATs like Bitmine can raise funds through low-interest convertible bonds and high-yield preferred stock, directly using the funds to purchase ETH and generate continuous returns through staking. Under reasonable assumptions, staking income can partially cover interest and dividend costs, allowing the treasury to continuously leverage and accumulate ETH in a favorable market environment. This second-stage DAT model may further strengthen ETH's high beta relative to BTC in 2026.
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