Written by: Glendon, Techub News
After a gap of 3 years and 8 months, Ethereum has finally stood at $4,400 again, which is indeed inspiring.
Compared to Ethereum's lackluster performance in the previous cycle, it has recently shown a resilience comparable to Bitcoin. Therefore, whether Ethereum can maintain its current momentum and break previous highs inevitably becomes a focus of attention for investors. This article will discuss the driving forces behind Ethereum's recent price increase and its ecological status, as well as explore whether it can set a new historical high.
'The Institutional Era' has arrived, and listed companies have fired the 'Ethereum Reserve War'
Ethereum's recent sustained rise is attributed to institutions initiating the 'Ethereum Reserve War', ETF fund inflows, and the compounded effects of favorable policies. However, it is undoubted that the 'Ethereum Reserve War' has played a major driving role. Just as the previous highs in Bitcoin prices were driven by massive institutional buying, Ethereum benefits from this as well.
On May 31, the US-listed company SharpLink Gaming announced the completion of a $425 million private placement to initiate an Ethereum asset reserve strategy, and on June 13, purchased approximately $463 million worth of Ethereum at an average price of $2,626, becoming the largest publicly traded holder of Ethereum, officially firing the first shot in the 'Ethereum Reserve War'!
Prior to this, although many listed companies had bought Ethereum, no company had publicly announced an increase in Ethereum holdings with more than $400 million in funds. At that time, Bitcoin was in the spotlight, almost attracting all institutional attention, while Ethereum's price performance was mediocre, and there were still many doubts surrounding its trading volume, scalability, and other aspects.
The digital asset derivatives company Two Prime publicly criticized in early May that Ethereum's statistical trading behavior, value proposition, and community culture have failed to the point of being unworthy of participation, emphasizing that fundamental changes have occurred in Ethereum, its correlation with Bitcoin has decreased, and tail risks have significantly increased. The company plans to focus on Bitcoin in the future.
Glassnode also pointed out on May 20 that the Ethereum Pectra upgrade has not driven an increase in network participation. Since the upgrade, the average number of new and recovered addresses has decreased by 1.8% and 8.4% respectively compared to the beginning of the year.
Notably, the Ethereum Pectra upgrade was completed on May 7 on the mainnet. Prior to this, Galaxy researcher Zack Pokorny monitored that in the five full trading days after Pectra's launch, the daily number of Blobs purchased by Rollup increased from about 21,200 to 25,600, the cost of L2 on Ethereum plummeted, but node pressure increased.
The Pectra upgrade undoubtedly improved the scalability, efficiency, and flexible staking of the Ethereum network, but at that time, the ecological situation of Ethereum did not see any substantial improvement because of it.
However, during this period, institutional interest in Ethereum has been evident.
As early as May 15, the Nasdaq-listed blockchain company BTCS announced it would raise $57.8 million through convertible notes for strategic accumulation of Ethereum and stated it would emulate MicroStrategy's strategy by obtaining continuous income through staking and block building. However, compared to SharpLink Gaming, which is a publicly listed internet technology company, BTCS, as an industry-native enterprise focused on blockchain infrastructure services, cannot compare in scale and effect with the former.
At the same time, there has been a significant turning point in US Ethereum spot ETF data. According to ichaingo data, starting from May 12, US Ethereum spot ETFs officially ended nearly nine weeks of consecutive net outflows and achieved net inflows for 13 consecutive weeks.
As June approached, with more listed companies entering the fray, the battle for Ethereum reserves finally began.
During this period, on June 26, the listed mining company Bit Digital announced it would shut down its Bitcoin mining business and transform into a pure Ethereum staking company, adopting an Ethereum reserve strategy. Subsequently, the company raised $150 million for the purchase of Ethereum and plans to 'gradually' convert its Bitcoin holdings into Ethereum.
Coincidentally, BitMine, which previously focused on Bitcoin reserve strategies, also announced on June 30 that it would shift to Ethereum, completing a $250 million private placement to implement its Ethereum financial strategy.
Since then, Ethereum has ushered in its early three giants BitMine, SharpLink Gaming, and Bit Digital. It is also from this time that Ethereum gradually surpassed its competitor Solana in the cryptocurrency reserve war, although the latter had earlier companies that regarded it as a core reserve asset: DeFi Development Corp., Upexi, and SOL Strategies.
So, how has Ethereum managed to surpass Solana and come from behind despite slow transaction processing speeds, high transaction costs, and even facing ecological development bottlenecks?
In response, Ethereum co-founder Vitalik Buterin provided an answer in a CNBC interview. He stated that people think institutional investors only care about scale and speed, but in practice, the situation is quite the opposite; many institutions express that they value Ethereum because it is stable, reliable, and does not crash.
Tomasz Stańczak, the newly appointed co-executive director of the Ethereum Foundation, also added that the core reason institutions choose Ethereum is the same; Ethereum has not stopped for a moment in the past ten years. When institutions send orders to the market, they want to ensure that their orders are treated fairly, with no preferences, and that trades are executed upon delivery. As stablecoins and tokenized assets become mainstream, these guarantees become increasingly valuable.
In July, under the influence of the three giants continuously increasing their Ethereum holdings, more and more listed companies such as GameSquare and BTC Digital joined this reserve war, and Ethereum ushered in what can be considered its strongest 'institutional era' ever, to the extent that Wintermute's founder and CEO Evgeny Gaevoy tweeted on July 17 that 'there is almost no Ethereum available for sale on Wintermute's OTC trading platform.' During this period, Ethereum's price also broke through $3,500, reaching its highest level since January 2025.
In this process, we need to clarify that Ethereum's continued rise is largely benefiting from favorable policies.
On July 19, US President Trump officially signed the GENIUS Act (Guidance and Establishment of a National Innovation Act for US Stablecoins) at the White House, marking the entry of US stablecoin regulatory legislation into the implementation phase and significantly impacting the global cryptocurrency market landscape.
In addition to stablecoins, which are central to the bill, many believe that Ethereum is the biggest beneficiary of this bill, including Andrew Keys, co-founder and chairman of the Ethereum reserve company 'The Ether Machine'.
He pointed out in a CNBC interview that 'Ethereum is the biggest beneficiary of the GENIUS Act because 90% of RWA and stablecoins are deployed on Ethereum, just as 90% of searches in the search market happen on Google, with Yahoo and Bing accounting for only a small share. Ethereum is a productive asset, unlike Bitcoin, which can generate intrinsic yield through staking.'
According to Cointelegraph reports, since the passage of the GENIUS Act in July, the supply of yield-bearing stablecoins has surged, with on-chain data showing that the biggest beneficiaries are Ethena USDe (USDe) and Sky's USDS. Additionally, DefiLlama data indicates that the circulating supply of USDe has grown by over 97% in the past month, reaching 10.431 billion tokens, ranking third in market capitalization among all stablecoins. Interestingly, as Andrew Keys noted, the circulating supply of USDe on Ethereum has also increased by more than 97%.
And the new company The Ether Machine, created by him with several early Ethereum builders and financial veterans, immediately made bold claims upon its public launch: the company plans to hold over 400,000 Ethereum at the outset of its listing, with a total value exceeding $1.5 billion.
On July 31, The Ether Machine increased its holdings by approximately 15,000 Ethereum, bringing its total holdings to 334,757, rapidly surpassing Big Digital and BTCS in reserve amounts.
Data from the Strategic ETH Reserve website shows that as of the writing, The Ether Machine holds approximately 345,400 Ethereum, currently valued at about $1.48 billion, ranking third among Ethereum reserve companies, just behind BitMine's approximately 1.2 million Ethereum (valued at about $4.94 billion) and SharpLink Gaming's approximately 598,800 Ethereum (valued at about $2.57 billion).
Since then, the Ethereum reserve war has intensified. This spectacle, aside from Bitcoin, is no longer comparable to competitors such as SOL, BNB, etc. Even Vitalik has come out in support of 'Ethereum asset reserve companies', but he simultaneously pointed out that Ethereum's future cannot come at the cost of excessive leverage. He worries that a price drop could trigger a chain reaction of forced liquidations, leading to further declines in Ethereum's price and damaging its credibility. CryptoQuant analyst CryptoOnchain also pointed out that Ethereum's market leverage is nearing historical highs (ELR at 0.68), and high leverage and resistance testing factors may still trigger violent downward fluctuations in the short term.
In this process, this situation is also fully reflected in the Ethereum spot ETF data. As of last week, US Ethereum spot ETFs have achieved net inflows for 13 consecutive weeks, with a total inflow exceeding $7.3 billion. On August 11, Eastern Time, the net inflow of funds in this ETF sector reached approximately $1.019 billion, setting a new historical high.
Reviewing Ethereum's development trend over the past three months, the institutional reserve war is undoubtedly a major driving force behind Ethereum's continued rise. So, as prices continue to climb, has the activity level of the Ethereum network and ecosystem kept pace?
Stable and slow recovery momentum
Currently, Ethereum's price is nearing historical highs, and looking at the entire ecosystem, although Ethereum's various data may not be particularly eye-catching, it still displays a stable upward vitality.
Etherscan data shows that on August 5, the daily number of Ethereum transactions rose to about 1.878 million, approaching the historical record of about 1.96 million set on January 14, 2024. In the past seven days, the daily number of Ethereum transactions reached a low of about 1.645 million.
According to Bitinfocharts data, on July 30, the number of active Ethereum addresses reached approximately 1.16 million, the highest level since September 13, 2023. We can observe that as prices rise, the recent activity level of the Ethereum network has also shown a noticeable upward trend.
Although the number of transactions and active addresses per day has increased, as of the writing, Ethereum's Gas fee remains low, around 0.32 Gwei. This indicates that a large number of transactions belong to 'not in a hurry' transactions, which do not require artificially increased Gas fees to ensure confirmation priority, and may be related to activities such as wallet consolidation, simple transfers, or participation in some DeFi protocols for long-term gains.
This is likely due to Ethereum raising its block Gas Limit to 45 million units on July 22, up 25% from the 36 million units set in February this year. In the short term, raising the block Gas Limit will lower Gas fees. However, as network activity continues to grow, even resembling the DeFi or NFT frenzy, new transactions may quickly fill the expanded block space, leading to a rise in Gas fees.
When mentioning DeFi/NFT aspects, the NFT market experienced a warming trend weeks ago. In the week of July 14, the total NFT trading volume across all blockchains reached $143.5 million, setting a six-month high, with Ethereum NFTs reaching a weekly trading volume of $75 million, accounting for about 52% of the total trading volume across major blockchains. CryptoSlam data shows that the entire sales volume of NFTs on Ethereum was only about $100 million in June.
In the past month, Ethereum's NFT sales have exceeded $339 million, with an increase of over 92%. CoinGecko data shows that the current global NFT total market value has risen to $7.513 billion. However, this figure is still significantly lower than the previous cycle's peak of $10.2 billion, which may indicate that the current NFT market still has more upside potential.
In the DeFi sector, multiple indicators show that DeFi is in a thriving stage. As of August 12, DefiLlama data shows that the total locked value (TVL) of DeFi has surpassed $150 billion. Although this is far from the peak of the DeFi wave in 2021 (approximately $178.7 billion), it has already exceeded the previous TVL high of $128.4 billion on December 15, 2024. Among them, the DeFi TVL on Ethereum is approximately $91.75 billion, accounting for 61.16%, with a monthly increase of over 29%.
At the same time, the top ten DeFi projects on Ethereum have all realized a general rise in the past month, with Ethena's monthly increase exceeding 93%, and its TVL is approximately $10.6 billion; the top three, Lido, Aave, and EigenLayer, have also seen monthly increases of over 35%. Additionally, in the past seven days, the trading volume of DEX on Ethereum was approximately $30.553 billion, an increase of 12.1%.
It is worth noting that compared to the previous bull market, this round has seen an abundance of liquid staking and re-staking protocols, with a large amount of Ethereum locked in the protocols. There may even be overlapping calculations in the middle; in such a case, if the TVL data has not yet broken new highs, it indicates that people's interest in DeFi has not significantly rebounded.
In summary, we have not seen the kind of madness that caused congestion in the previous bull market for Ethereum in this bull market, indicating that participation in its ecosystem must have declined. Analogously, it is like a mall in off-peak and peak seasons; the daily foot traffic may be the same, but in peak season, consumer desire is strong, while in off-peak season, it might just be a leisurely stroll after dinner. However, this also somewhat indicates that Ethereum is gradually maturing, as the protocols that incite gamblers to bet recklessly are gradually disappearing, leaving behind calm investors seeking opportunities and rational players participating in projects.
But this is still far from our expectations; we do not wish for chaotic and frenzied stampedes, but rather for orderly queues with a lack of crowds. Overall, Ethereum is still steadily developing in this round, but the intensity is not what it used to be.
Can Ethereum set a new historical high?
Finally, returning to the initial question, can the price of Ethereum in this cycle break the high of November 2021 ($4,868) and set a new historical high? With Ethereum just breaking the $4,400 mark, I believe the possibility is very high.
Firstly, the enthusiasm for institutional buying has not cooled, the pace of accumulation has not slowed, and the buying wave has expanded from US-listed companies to Hong Kong-listed companies in China, such as Jinyong Investment and Huajian Medical.
As of the writing, several publicly traded companies have announced plans to continue increasing their Ethereum holdings. The US stock-listed company Fundamental Global has submitted a $5 billion draft registration application to the US SEC to support its Ethereum accumulation strategy and completed the purchase of 47,331 Ethereum for about $200 million today.
In addition, BTCS plans to raise $2 billion to expand its Ethereum reserves; Nasdaq-listed company 180 Life Sciences plans to raise about $425 million through private equity financing to establish an Ethereum reserve strategy and will rename itself ETHZilla Corporation; the US-listed medical company Cosmos Health has reached a securities purchase agreement with a US institutional investor to raise $300 million to start its Ethereum treasury strategy.
In summary, the Ethereum reserve plans of these institutions may indicate that this riveting battle for Ethereum reserves has not yet truly entered a heated stage.
The DeFi Report founder Michael Nadeau also pointed out today that Ethereum's supply shock is unfolding in real-time. In the third quarter so far, Ethereum on CEX has decreased by 6.7%. It has now fallen to its lowest level since July 2016. As Ethereum treasury-like companies begin to implement on-chain strategies to enhance yields and per-share ETH holdings, this number is expected to continue to decline.
This means that more capital will flow into the blockchain, which may trigger a stronger 'reflexivity' effect, whereby market activity and fundamentals will further improve as price trends improve.
Secondly, on the policy front, the US SEC recently released new guidelines stating that certain liquid staking activities do not involve securities, and those engaged in liquid staking activities are not required to register with the agency under securities laws. Liquid staking parties that may not be subject to securities laws include Lido, Marinade Finance, JitoSOL, and Stakewise. In simple terms, the US SEC has ruled that liquid staking tokens do not fall under the category of securities, which brings significant regulatory benefits to the industry and boosts market confidence in Ethereum and staking platforms. Because of this, some listed companies have begun to accelerate the implementation of Ethereum reserve strategies.
Additionally, although Ethereum's scalability issue has not been perfectly resolved, its short-term goal plans to raise the Gas Limit to 60 million once again. Moreover, Ethereum core developers have preliminarily chosen to release the next major hard fork, Fusaka, in November, aiming to make the network more efficient and scalable, with a long-term goal of achieving a Gas Limit of 150 million per block through the Fusaka hard fork.
In summary, although there may be short-term risks of high leverage and price volatility, the strong institutional buying spree, demand for spot ETFs, and network upgrades are still important factors for a bullish outlook on Ethereum in the mid-term. With favorable regulations and a continuous increase in staking participation, it will further enhance Ethereum's scalability and practicality.
Therefore, I believe that Ethereum is very likely to experience growth similar to Bitcoin. Of course, each cycle and each cryptocurrency has different driving forces for their rise, and it is difficult to truly predict Ethereum's subsequent development based on past experiences, but for the moment, Ethereum's prospects are worth looking forward to.
