Ethereum's Return to Glory? Wall Street is Doubling Down

Wall Street is welcoming the crypto boom.

Traditional finance has exhausted its growth narrative. Everyone is over-invested in artificial intelligence, and the allure of software companies is far less exciting than in the 2000s and 2010s.

For growth investors raising funds to invest in innovative stories with huge market potential, they are well aware that most AI stocks are trading at inflated valuations, while other 'growth' narratives have become hard to find. Even the once highly regarded FAANG stocks are gradually transforming into 'compound growth' stocks focused on quality, maximizing profits, and annualized returns around 15%.

For reference, the median enterprise value/revenue (EV/Rev) multiple for software companies has fallen below 2.0 times.

01

Crypto assets make their debut.

BTC breaks through historic highs, the U.S. president vigorously promotes crypto assets at a press conference, and regulatory tailwinds have brought this asset class back into the spotlight for the first time since 2021.

But this time, it's not about NFTs and Dogecoin. This time, it's about digital gold, stablecoins, 'tokenization', and payment reforms. Stripe and Robinhood claim that crypto assets will be a major priority for their next phase of growth. COIN has entered the S&P 500. Circle has shown the world that crypto assets are an exciting growth story enough for growth stocks to overlook earnings multiples once again.

02

What does all this mean for ETH?

For us crypto-native players, the competitive landscape of smart contract platforms seems very fragmented. There are Solana, Hyperliquid, and a dozen new high-performance chains and Rollups.

We know that Ethereum's leading position is facing real challenges and survival threats. We know it has yet to solve the problem of value accumulation.

But I highly doubt that Wall Street understands this. In fact, I dare say that most Wall Street 'outsiders' are nearly unaware of the existence of Solana. XRP, Litecoin, Chainlink, Cardano, and Dogecoin may have more external recognition than SOL. Don't forget, these people have not paid attention to our entire asset class for several years.

What Wall Street knows is that ETH can withstand the test of time, having been battle-tested and has long been the main 'follower' of BTC. What Wall Street sees is that it is the only crypto asset, apart from BTC, having a liquid ETF. What Wall Street likes is a classic relative value investment opportunity with clear catalysts.

These suited investors may not know much, but they are aware of Coinbase, Kraken, and now Robinhood has also decided to 'build on Ethereum.' With a bit of due diligence, they will find that Ethereum has the largest stablecoin pool on-chain. They will start doing 'moon math,' and soon realize that while BTC has hit new highs, ETH is still over 30% lower than its peak in 2021.

You might think that relatively poor performance is a bearish signal, but these investors have a different approach. They prefer to buy lower-priced, clearly targeted assets rather than chase high prices that make them doubt 'if it's already too late.'

I think they have already entered the market. Investment authorization is not an issue; any fund can push for crypto asset investment as long as there are appropriate incentives. Although the crypto community has sworn off ETH for over a year, this token has performed exceptionally for a month straight.

Year-to-date, the exchange rate of SOL to ETH has fallen nearly 9%. ETH's market cap share hit a low in May and has since seen the longest upward trend since mid-2023.

It is attracting new buyers.

Since March, the inflow of funds into spot ETFs has been consistently rising.

ETH's 'microstrategy' imitators are also gaining momentum, introducing structural leverage to the market early on.

Even some crypto-native participants may have realized their insufficient exposure to ETH, beginning to rotate out of positions in BTC and SOL, which have performed well over the past two years.

External buyers are bringing a paradigm shift to ETH assets, challenging our view of it as 'only falling and not rising.' The shorts will eventually be liquidated. Then, our crypto-native capital will decide to chase the trend before the market reaches a full speculative frenzy on ETH.