A 'crypto moment' is happening on Wall Street.
Written by: Sunny, Messari Research
Translated by: Alex Liu, Foresight News
In recent years, traditional finance (TradFi) has gradually lost its source of growth narratives. AI has been overallocated, and software companies no longer possess the same imaginative space as they did in the 2000s and 2010s.
For growth investors who raise funds to bet on disruptive innovation narratives, the reality is: AI asset valuations are generally inflated, and other 'growth stories' are hard to tell with novelty. Once-dominant FAANG stocks are now gradually transforming into moderate 'compounding stocks' pursuing profit maximization. The median sales multiple (enterprise value / sales) for current software companies has fallen below 2 times.
Thus, cryptocurrencies have stepped back into the spotlight.
Bitcoin breaks historical highs; the U.S. president is 'strongly promoting' crypto assets at a press conference; a series of regulatory tailwinds have brought this asset class back into mainstream view for the first time since 2021.
Unlike the previous cycle's NFTs and Dogecoin, the main characters in this cycle are digital gold, stablecoins, 'tokenization', and payment system reforms. Stripe and Robinhood claim that the next phase will focus on crypto business; Coinbase has successfully joined the S&P 500 index; Circle has presented a growth narrative compelling enough for capital markets, making investors once again overlook valuation multiples and focus on potential stories.
But what does all this have to do with ETH?
For crypto natives, the battleground for smart contract platforms has long been divided: Solana, Hyperliquid, and countless high-performance new chains and rollup platforms pose a real threat to Ethereum's dominance.
We know that Ethereum has not truly solved the value capture problem, and we are also aware that it is facing structural challenges.
But Wall Street is unaware of these facts. In reality, most Wall Street practitioners know almost nothing about Solana. When it comes to recognition, established coins like XRP, LTC, LINK, ADA, DOGE may have a stronger presence in their minds than SOL. After all, these individuals have almost completely faded from the crypto market over the past few years.
What they know is that ETH is 'lindy' — it has stood the test of time; it has survived multiple market fluctuations; for a long time, it has been the main 'Beta' asset outside of Bitcoin. What they see is that ETH is currently one of the only two crypto assets with a spot ETF. They prefer assets that are relatively cheap in valuation and are about to receive catalysts in a 'value gap.'
In their eyes, Coinbase, Kraken, and Robinhood are all choosing to build products on Ethereum. With a little due diligence, they can realize that Ethereum has the largest on-chain stablecoin pool. They begin to do 'moon landing calculations' — only to find that Bitcoin has hit a new high, while Ethereum is still more than 30% away from its 2021 peak.
For them, this 'relative undervaluation' is not a risk but an opportunity. They prefer to buy an asset that is still at a low level and has a clear target price rather than chase a coin that is 'already too late' on a chart.
And they may have already entered the market. Now, compliance restrictions for institutional investment are no longer a major issue. As long as there are sufficient incentives, any fund can strive to allocate crypto assets. Despite crypto Twitter (CT) repeatedly vowing over the past year to 'never touch ETH again,' ETH has outperformed other mainstream assets for over a month based on market performance since this year.
As of now, SOL/ETH has fallen nearly 9% this year; Ethereum's market cap share began its longest rally since mid-2023 after bottoming out in May.
So the question arises: if the entire crypto community believes ETH is a 'cursed coin', how can it still outperform?
The answer is: it is attracting new buyers.
Since March, net inflow data for Ethereum spot ETFs has been in an 'up only' mode.
(Data source: Coinglass)
Ethereum 'accumulators' mimicking the MicroStrategy model are seeing their stock prices soar, injecting structural leverage into the market.
At the same time, some native crypto users may realize their configurations are insufficient and start transferring funds from BTC and SOL, which have surged over the past two years.
It is important to clarify that we are not saying the Ethereum ecosystem has solved its problems. Rather, the asset ETH is beginning to gradually 'decouple' from the Ethereum network.
External buyers are reshaping the narrative around ETH, shifting from a paradigm of 'decline is certain' to 'valuation reassessment.' Eventually, the shorts will be squeezed, and native funds may join the buying frenzy, leading to a market craze centered around ETH, culminating in a climactic peak at some point.
If this happens, ETH's historical high may not be far off.
