With the price of Ethereum (ETH) hovering around $2,000 for an extended period, opinions on the future direction of ETH have diverged. Analysts point out that Ethereum is currently "stuck between different narratives," no longer entirely reliant on the old scaling story, nor having established a new core value proposition, leading to a wait-and-see attitude among market participants.
The old narrative is fading away: Layer 2 expansion is a done deal.
According to Forbes, analyst Callan Sarre pointed out that the market narrative for Ethereum has been quite clear over the past few years: scaling is handled by Layer 2, while the mainnet maintains security and decentralization.
This strategy has indeed successfully attracted a large influx of capital and developers. Today, Layer 2 networks can handle massive transaction volumes and significantly reduce transaction costs compared to the mainnet peak. However, problems have also emerged—as transaction and fee revenue gradually shifts to Layer 2, the mainnet's ability to capture value is being challenged.
In other words, the expansion was successful, but how to ensure the return of value has become a new core issue.
A new narrative emerges: privacy and zero-knowledge technologies become the focus.
Sarre believes that the market focus is gradually shifting to whether "zero-knowledge" and privacy technologies can be more deeply integrated into the mainnet layer.
Currently, all Ethereum transactions are highly transparent, which is not a problem for native crypto users. However, for corporate CFOs or large institutional funds, complete transparency means that strategies can be tracked in real time, which is not ideal in practice.
If Ethereum hopes to attract trillions of dollars in institutional funding, its privacy mechanisms must likely be "built into the protocol layer," rather than being offered as an add-on solution. Analysts point out that the importance of the first protocol-level privacy proposals may far exceed the market's current pricing reaction.
Price trend divergence: Downside risks coexist with fundamental growth.
Market opinions are divided regarding the price outlook. Some analysts believe that Ethereum is still more than 60% away from its all-time high, and recent volatility in traditional financial markets may bring additional pressure. Especially given the rising uncertainty in the macroeconomy and capital markets, crypto assets are unlikely to remain unaffected in the short term.
However, some argue that Ethereum's fundamentals still hold potential. The tokenization of real-world assets (RWAs) and their integration with traditional finance are considered important indicators. For example, BlackRock's announcement that its tokenized fund, BUIDL, will be tradable on Uniswap is seen as a significant milestone in the convergence of traditional finance and DeFi.
In addition, the fund flows of Ethereum spot ETFs, and whether staking yields are included in the product design, will also become important indicators of institutional sentiment.
The era of revenue has arrived: the market is shifting from "story" to "cash flow".
Another analyst bluntly stated that the crypto market is entering a "revenue-is-king" phase. In the past, market capitalization was supported by the imagination of future technological potential; now, investors are more concerned with how much revenue is actually generated on-chain and whether that revenue matches the market capitalization.
For Ethereum, Layer 1 generates revenue by selling block space, but if the transaction fees are too high, it will inhibit user growth, and if they are too low, it will affect value accumulation. How to strike a balance between the two is a long-term challenge.
In conclusion: The key lies in "where the value ultimately resides".
Overall, Ethereum is not lacking in development momentum, but rather is in a period of narrative transition. From "successful Layer 2 scaling" to "built-in protocol-level privacy," and then to "institutional yield ETFs" and "on-chain revenue measurement," the market is redefining the core value source of Ethereum.
When the market cannot clearly determine how long-term value will accumulate, prices often enter a period of consolidation. The next trend may not depend on the technicals themselves, but rather on which narrative can truly convince capital.
