Institutional funds continue to flow in, will ETH sit and wait for To The Moon?

Ethereum is now the largest value oasis in the Crypto Assets.

Author: Daii

I've been saying, Ethereum is now the biggest value trap in the Cryptocurrency.

How deep is this depression? Just compare it with Bitcoin's market share and you'll know.

From the above figure, it can be seen that Bitcoin's market share has reached 60%, while Ethereum is only 10%, hitting a new low in nearly four years.

1. What are the problems with Ethereum?

Analysts at JPMorgan Chase & Co. have given you a table, so you might be able to get an idea.

First, the current number of ETH has not increased significantly, only from 1.2 billion to less than 1.21 billion, with an inflation rate of less than 1%, far lower than Solana's 4.78%.

The problem may be with item 8 (see image above), gas fees, which have dropped by 54% all at once. There are two main reasons for this:

One is Ethereum's own L2 sidechain diverted some of it;

There is also a craze for 'shitcoin', which Ethereum did not catch up with.

It should be noted that "Coins" are used instead of "Meme Coins" because these coins are purely tools for cutting leeks, which are fundamentally different from traditional meme coins such as PePe, Doge, and SHIB, and calling them "Coins" can keep more people away from them.

Due to the negative press brought to Solana by "Coins", first the Trump couple, and now Argentine President Milley. It's also starting to re-examine Solana's core values.

It is certain that the 'Shitcoin' has brought temporary traffic to Solana, but at present, Solana is being counterattacked by the 'Shitcoin'. This is another topic, we will talk about it specifically another day.

Due to Solana's inherent lack of decentralization, it is destined to become an arena for big capital. On the contrary, decentralization is Ethereum's strength, which is shown in item 5 of the diagram above. Even if the price of ETH has not been able to rise, TVL denominated in ETH has been rising, and it has risen a lot, by 25%, which is really rare.

The distribution chart of TVL below is a true portrayal of Ethereum's dominance in decentralized finance. Currently, Ethereum's TVL is 7 times that of Solana.

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Decentralization is the foundation of Ethereum and the capital for Ethereum to take off. So, why say Ethereum is about to take off 'now'?

2. Clever Money Tells You

Wednesday's article "430 million outflows! The Crisis and Opportunity of Bitcoin", I talked about the 430 million funds flowing out of the Bitcoin ETP. The details about the inflow of Ethereum ETP funds have not been discussed in time, as shown in the box below.

On the surface, Ethereum also saw an outflow of 7 million last week, only Solana and XRP, due to the potential approval of ETF applications by the SEC, saw inflows of 8.9 million and 8.5 million respectively (see red circles in the figure above).

However, if you compare Ethereum's inflows this month and this year, you will see that more institutions' smart money is accelerating into Ethereum ETPs.

Considering that the current encryption ETP has a 75% share in the United States, there is no ETP for Solana in the United States. So the Solana data above only represents the 25% market share attitude, let's convert Solana's inflows this month and this year into a market-wide attitude.

Have you noticed that the inflow of Ethereum since the beginning of this month is still 9.6 times that of Solana, and the inflow since the beginning of this year is 4.5 times that of Solana?

Obviously, more smart money is flowing into Ethereum. Possible reasons, as I discussed in 'Learning from Good Examples,' Goldman Sachs increased its Ethereum ETF holdings by 2000% in the fourth quarter of last year. The power of example is enormous.

It seems that everything is ready, so where is the east wind?

3. Where is the east wind?

There are two Ethereum, one is the Ethereum ETF collateral approved by the SEC, and the other is the Ethereum 2025 upgrade online.

The first breeze: Regulatory breakthrough of Staking ETF

Cboe BZX Exchange has submitted a proposal to the SEC requesting permission to allow 21Shares Core Ethereum Exchange Traded Fund (ETF) to stake Ethereum. Once approved, the ETH ETF will also become an interest-bearing asset class, potentially igniting an investment frenzy for ETH ETFs. Following closely, the New York Stock Exchange has also requested staking for Grayscale's Ethereum ETF.

Once approved, it means that traditional investors can not only hold ETH, but also earn 3.5%-5% annualized returns through staking. It is estimated that if the SEC approves such ETFs, Ethereum's annual staking income may exceed $5 billion, becoming a "magnet" to attract traditional funds. More importantly, the opening of the staking function will realize the transition of Ethereum ETFs to "interest-bearing assets", completely rewriting its valuation logic - pledged ETFs may open a trillion-dollar market for ETH.

Second Gust: Pectra Upgrades and Reshapes Technology Base

If ETF collateral is the key to opening the funding floodgates, then the April 2025 Pectra upgrade is the engine of Ethereum's self-revolution. This upgrade includes three major aces in the hole:

• EIP-3074: Allows users to combine multiple transactions into one operation and have a third party pay the Gas fee. This improvement directly targets the "user experience problems" of Ethereum, and is expected to reduce the interaction costs of ordinary users by more than 50%. For example, projects can pay the fees for users like "treating someone to dinner", completely eliminating the threshold for newcomers to enter DeFi.
• EIP-7251: Increase the staking limit for a single validator from 32 ETH to 2048 ETH. This change directly benefits institutions, such as staking service providers like Lido, by reducing 98% of the number of nodes, reducing operational costs, and improving network speed. Analysts estimate that this move may attract over $20 billion in additional staking funds.
• ERC-7683 and 7841: The unification of cross-chain standards enables asset flow between Ethereum L2 solutions to be as smooth as 'high-speed rail transfers'. Uniswap and Across Protocol have built a cross-chain order system based on this standard, with an expected 70% decrease in transaction failure rate and liquidity pool depth increasing by more than 3 times.

If there is still a variable in the first east wind, then the arrival of the second east wind is just a matter of time.

Conclusion

The long-term price slump of Ethereum has caused many people to forget its many advantages.

As the world's first programmable blockchain, Ethereum has a strong network effect and a large developer community, and its smart contract capabilities and decentralized application platform provide fertile ground for countless innovative projects. Ethereum's value will be rediscovered as more large institutional funds flow into Ethereum ETPs.

So are you ready to make a big move? Wait, let me show you a picture.

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When I wrote this article, the price of ETH was 2702. Once the price falls instead of rising, around 2566.5, more than 800 million long positions will be liquidated. Don't forget, the current price of ETH is still determined by centralized exchanges, and most centralized exchanges lack regulation. Before Ethereum takes off, take some time to insert a 'needle' for you and draw a 'U' to harvest, which is not difficult at all. If you still have doubts about this, take a look at 'Is a big rise imminent? Beware of the black hand!' when you have time.

Leverage can amplify profits, but it can also accelerate destruction - controlling risks and preserving principal is the only way to survive.