The script is just as expected; the first wave of Ethereum dropped from 3940 to 3368, which is exactly a drop of

The current state of ETH and capital inflows is very similar to when mining stocks and MicroStrategy financed buying BTC to hit $100,000. At that time, many people thought that $100,000 would be the peak of this cycle, and now it's $120,000.

Although BTC and ETH are good assets with a grand future, let's not forget that after BTC reached its high of $108,000 in December last year, it dropped 14% within four days. Currently, ETH is also near a key position at $4,000, where there is a significant amount of trapped positions. Will the same script repeat itself on ETH? A drop followed by a new high can cause many people to lose their positions. One frustrating aspect of this ETH cycle is that the K-line shows it has only risen 10% this year; it experienced a significant drop in between. However, over these past three months, it has surged 150% almost without pause, while the fundamentals of Ethereum have not changed that much during this period.

The reason for this surge is also due to the liquidity premium and sentiment premium from the U.S. stock market. There are too many companies wanting to implement MicroStrategy's approach, and the liquidity is abundant. For example, last Friday, SBET's daily trading volume was $12.6 billion, making it easy for companies to cash out hundreds of millions of dollars; the liquidity is indeed excellent. Using the cash-out funds to buy ETH, hundreds of millions of dollars boost ETH's price, gaining sentiment premium. When prices rise, a stronger positive cycle will be established, but will this really continue indefinitely? When will it stop? This is something we need to think about.

How to reasonably analyze how high ETH will rise?

There's a logic that persuaded me: how is ETH valued? The reference standard is the future stablecoins running on ETH * 2, because according to the POS mechanism, controlling 51% of the nodes can potentially control the entire network. Currently, the scale of stablecoins on Ethereum is about $120 billion, up from $70 billion last year, a growth rate of 70%. Based on this, a valuation of over $400 billion for Ethereum seems quite reasonable, but we also need to consider the upper limit of ETH's current valuation as a standard; we can't just think ETH's price should rise to $10,000.

Since the greatest value of the ETH network comes from stablecoins, I will use the current market value of payment leader Visa as the upper valuation limit, at $658.7 billion. If ETH and Visa had the same market value, then its price should be $5,452, which indeed exceeds the highest point of $4,800 in 2021.

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