Recently, many KOLs have held a pessimistic view of the crypto market, primarily for two reasons: first, the increasing risk of an economic recession in the U.S. is likely to lead to a global demand contraction; second, resilient inflation may constrain the Federal Reserve's policy space, resulting in interest rate cuts that are less than expected. While these concerns are not without merit, our viewpoint is quite the opposite: Bitcoin is the 'dark horse' of this cycle.
First, under the policy combination of 'manufacturing return + high tariffs', the dollar will inevitably enter a depreciation cycle, which will lead to a significant increase in demand for safe-haven assets like gold and Bitcoin. Given the strong pricing power of U.S. capital over Bitcoin, there is a greater willingness to push Bitcoin to replace gold as the new king of safe-haven assets. (This has been analyzed previously, so it won’t be elaborated on here.)
Additionally, the prosperity of the crypto market objectively provides a strategic buffer for the dollar system. The debt reduction plan proposed by Miran, chief economist of the Trump team—imposing a 'seigniorage tax' on dollar users and mandating the purchase of ultra-long-term U.S. Treasury bonds—has been difficult to implement in the traditional financial system but has been perfectly realized in the crypto market. Stablecoins like USDT and USDC essentially function as zero-yield U.S. dollar bonds; investors forgo interest income in exchange for liquidity and market access (on-chain dollars), which is effectively equivalent to charging a 'usage fee' to global dollar users. As long as U.S. regulators compel stablecoin issuers to hold U.S. Treasury bonds as reserve assets, the growth of stablecoins will become a 'perpetual motion machine' for increasing demand for U.S. Treasury bonds.
The (Dollar Payment Stablecoin Act) passed by the U.S. House of Representatives on April 2 adds a crucial patch to this institutional closed loop. The law explicitly states that the reserve assets of stablecoins are limited to cash, short-term U.S. Treasury bonds, and highly liquid assets like repurchase agreements based on U.S. Treasury bonds, while strictly prohibiting the use of reserves for lending, investing, or other purposes. This regulation will force issuers like Tether and Circle to standardize their reserve structure to a ratio of 0.8 U.S. Treasury bonds to 0.2 cash (though there are no strict requirements for this ratio, it represents the choice for maximizing returns). This means that for every additional $1 stablecoin issued, the stablecoin issuer must simultaneously increase its holdings of $0.8 in U.S. Treasury bonds as reserves.
According to the U.S. Treasury Borrowing Advisory Committee (TBAC), the market size for dollar stablecoins is expected to reach $2 trillion by 2028. If the (Dollar Payment Stablecoin Act) is approved by the Senate, the U.S. Treasury bonds held by stablecoin issuers will reach $1.6 trillion, nearly equal to the total amount held by China and Japan.
Therefore, in the context of widespread pessimism in the market, Bitcoin, due to its unique monetary attributes and strategic position within the dollar system, may exhibit performance that exceeds expectations. Of course, the performance of Bitcoin alone is still insufficient to support the prosperity of the crypto market, meaning that leading cryptocurrencies like ETH, SOL, XRP, and SUI will also contribute to the market's profit effect. Even when leading coins experience significant valuation increases, bottom-tier altcoins will have opportunities for temporary rebounds.
On May 7, Ethereum successfully completed the Pectra upgrade. This stands in stark contrast to the market performance following previous historical upgrades: after The Merge (September 15, 2022) and the Dencun upgrade (March 13, 2024), the price of ETH fell sharply, displaying a typical 'buy the rumor, sell the news' trend. However, after the Pectra upgrade, the price of ETH has continued to rise. Even more strangely, this upgrade, regarded as the most significant improvement in efficiency and user experience since the London upgrade (August 5, 2021), has almost gone unnoticed and undiscussed. This reflects that the confidence of ETH holders has been entirely consumed in this avalanche-like decline. Historical experience indicates that when market sentiment falls to a freezing point, and significant good news is overlooked, it often heralds an impending trend reversal.
In fact, the significance of Ethereum's Pectra upgrade goes far beyond the superficial technical optimizations—it plays a more critical role in clearing obstacles for the launch of ETH staking ETFs.
First, EIP-7251 raises the single-account staking limit from 32 ETH to 2048 ETH, allowing institutions like BlackRock to manage millions of ETH through a single account, thus reducing the complexity of multi-node operations. At the same time, EIP-6110 shortens the validator activation time from 12 hours to 13 minutes, which will reduce the time cost validators face while waiting during the deposit process, enabling them to complete deposits more quickly and begin participating in staking sooner.
Secondly, EIP-7002 allows validators to trigger withdrawals via smart contracts without waiting for queue mechanisms. Previously, ETH held by ETFs needed to wait 57 days to enter staking after being deposited, and 28 days to exit. After the upgrade, the withdrawal process can be shortened to a few hours, effectively avoiding forced discounted sales of ETFs during market volatility. Meanwhile, staking rewards will be automatically reinvested through contracts, increasing the annualized return rate of ETH ETFs to 4%-5%, further enhancing institutional allocation motivation.
In simple terms, after the Pectra upgrade, the confirmation time for ETH ETF staking rewards will be reduced from as fast as 12 hours (excluding queue time) to 13 minutes, and the settlement period will be shortened from at least T+28 days to as fast as T+2 days (U.S. stock market ETFs typically range from T+2 to T+7 days), and the rewards can also be automatically restaked. Overall, after the Pectra upgrade, the likelihood of ETH staking ETFs being approved and their attractiveness to institutions will significantly increase. In a sense, the Pectra upgrade is ETH's 'Davis Double'.