Why is Ethereum so powerful?
Rather than believing in conspiracy theories about market manipulation, I tend to think it’s a rise driven by positive factors.
The first positive factor is the Ethereum staking ETF.
BlackRock recently met with the new SEC chairman to discuss the Ethereum ETF staking. There are rumors that the ETH spot ETF staking may be approved soon. Some investors and market makers have seen the expectation of a rise and started accumulating.
From exchange data, when ETH fell from $4000 to $2500 last August, the exchange inventory surged, indicating that confidence was lost and people were preparing to exit.
But since it started at $1600, the trend has changed. Even as prices rise, the ETH inventory on exchanges continues to decrease rapidly.
This is very similar to the BTC trend, indicating that someone is quietly buying ETH and does not plan to sell in the short term.
Secondly, Ethereum has just completed the Pectra upgrade.
Some believe this upgrade is detrimental to ETH’s development, such as L2 diverting traffic from the mainnet, lowering Gas fees, and allowing non-native tokens to pay for Gas, while also increasing the staking cap.
In the short term, the decrease in Gas fees may reduce ETH demand.
But in the long run, improved network efficiency, better user experience, and a more prosperous ecosystem will attract more users and capital.
There is also the potential for RWA (Real World Assets).
Giants like BlackRock and Fidelity are laying out RWA infrastructure on Ethereum.
In the future, houses and bonds can be traded on-chain, which is a long-term positive for Ethereum, and the market's expectations for RWA may also be driving up ETH prices.
Lastly, I think it’s sector rotation, with funds searching for new hotspots.
Recently, the small-cap stock index Russell 2000 has risen sharply, closely mirroring ETH’s trend.
People may be betting on sector rotation, with funds flowing from BTC to ETH and altcoins.
A similar situation occurred at the end of 2024, and this rise in ETH may just be funds looking for new opportunities.
