Author: Trend Research
Since the market crash in 1011, the entire cryptocurrency market has been bleak, and market makers and investors have suffered heavy losses; the recovery of funds and sentiment will take time.
However, the cryptocurrency market is never short of volatility and opportunities, and we remain optimistic about the future.
Because the trend of integrating crypto assets with traditional finance into a new business format has not changed, but rather has quickly accumulated a moat during the market downturn.
1. Wall Street consensus strengthened
On December 3, Paul Atkins, the Chairman of the SEC, stated in an exclusive interview with FOX at the New York Stock Exchange: "In the coming years, the entire U.S. financial market may migrate on-chain."
Atkins said:
The core advantage of tokenization lies in the fact that if assets exist on the blockchain, the ownership structure and asset attributes will be highly transparent. Currently, listed companies often do not know who the shareholders are, where they are located, or where the shares are.
Tokenization is expected to achieve 'T+0' settlement, replacing the current 'T+1' trading settlement cycle. In principle, the on-chain delivery versus payment (DVP) / receipt versus payment (RVP) mechanism can reduce market risk and enhance transparency, while the time difference between clearing, settlement, and capital delivery is one of the sources of systemic risk.
Believes that tokenization is an inevitable trend in financial services, mainstream banks and brokerages are already advancing towards tokenization. The world may not even take 10 years... perhaps it will become a reality in a few years. We are actively embracing new technologies to ensure that the U.S. remains at the forefront in areas like cryptocurrency.
In fact, Wall Street and Washington have already built a deep capital network into cryptocurrency, forming a new narrative chain: U.S. political and economic elites → U.S. Treasury bonds (national debt) → stablecoins / cryptocurrency treasury companies → Ethereum + RWA + L2
From this chart, we can see that the Trump family, traditional bond market makers, the Treasury, technology companies, and cryptocurrency companies are intricately connected, with the green oval connections becoming the main trunk:
(1) Stablecoins (USDT, USDC, WLD-backed dollar assets, etc.)
The main reserve assets are short-term U.S. Treasury bonds + bank deposits, held through brokers like Cantor.
(2) U.S. Treasury bonds
Managed by the Treasury / Bessent side for issuance and management.
Palantir, Druckenmiller, Tiger Cubs, etc. are used to make low-risk rate bottom positions
Also the yield assets pursued by stablecoin / treasury companies.
(3) RWA
From U.S. Treasury bonds, mortgages, accounts receivable to housing finance
Tokenization is completed through Ethereum L1 / L2 protocols.
(4) ETH & ETH L2 equity
Ethereum is the main chain for RWA, stablecoins, DeFi, and AI-DeFi.
L2 equity / Token is a claim to future trading volume and fee cash flow.
This chain expresses:
Dollar credit → U.S. Treasury bonds → stablecoin reserves → various cryptocurrency treasuries / RWA agreements → ultimately settling in ETH / L2.
From the TVL of RWA, compared to other public chains that fell under 1011, ETH is the only public chain that quickly repaired its decline and rose. The current TVL is 12.4 billion, accounting for 64.5% of the total cryptocurrency.
II. Ethereum explores value capture.
Recently, the Ethereum Fusaka upgrade has not stirred much in the market, but from the perspective of network structure and economic model evolution, it is a 'milestone event'. Fusaka is not just about scaling through EIPs like PeerDAS, but attempts to solve the problem of insufficient value capture of the L1 mainnet caused by L2 development.
Through EIP-7918, ETH will introduce blob base fee into a 'dynamic floor price', binding its lower limit to the L1 execution layer base fee, requiring that blob fees be paid at a unit price of approximately equal to about 1/16 of the L1 base fee; this means Rollup can no longer occupy the long-term unit price payment at nearly 0 cost.
Ethereum's upgrades related to 'burning' involve three instances:
(1) London (one-dimensional): Only burning the execution layer, ETH begins to generate structural burning due to L1 usage.
(2) Dencun (Dual-dimensional + blob market independence): Burning execution layer + blob, L2 data written into the blob will also burn ETH, but at low demand, the blob portion is almost 0.
(3) Fusaka (Dual-dimensional + blob bound to L1): To use L2 (blob), you must at least pay a fixed proportion of the L1 base fee and burn it, making L2 activity more stably mapped as ETH burning.
Currently, blob fees for the one hour on December 11 have reached 569.63 billion times the cost before the Fusaka upgrade, burning 1,527 ETH in one day, with blob fees contributing the highest burning ratio, up to 98%. As ETH L2 becomes more active, this upgrade is expected to allow ETH to return to deflation.
III. Ethereum's technical aspects are strengthening.
During the decline under 1011, ETH's futures leverage positions were fully cleared, ultimately reaching the spot leverage positions, while many with insufficient faith in ETH caused many ancient OGs to reduce their positions and flee. According to Coinbase data, speculative leverage in the crypto circle has dropped to a historically low area of 4%.
In the past, a significant part of ETH's short positions came from traditional Long BTC/Short ETH pair trades, especially as this pair performed very well in the past bear market, but this time an unexpected event occurred. The ETH/BTC ratio has remained in a sideways resistance stance since November.
ETH's current exchange inventory is 13 million, about 10% of the total, at a historical low. As the Long BTC / Short ETH pair has been ineffective since November, in times of extreme market panic, there may gradually emerge a 'short squeeze' opportunity.
As we approach 2025-2026, the future monetary and fiscal policies of China and the United States have released friendly signals:
The U.S. will actively reduce taxes, cut interest rates, and relax cryptocurrency regulations; China will moderate its easing and maintain financial stability (suppress volatility).
Under the relatively loose expectations of China and the United States, suppressing the downward volatility of assets, in a scenario of extreme panic, where capital and sentiment have not fully recovered, ETH still remains in a better buying 'strike zone'.
(The above content is excerpted and reprinted with the authorization of partner PANews, original link | Source: Cycle Trading)
"Under global easing expectations, ETH has entered the value 'strike zone'" was first published by (Blockcast).
