Typically, January to May is the period with the highest returns for Ethereum, with double-digit growth on average each month. This trend is about to enter an acceleration phase.

• ETH Staking

• ETH deflation

• ETH on exchanges

• Re-staking

• EIP-4844

Ethereum supply dynamics:

1/ Total value of pledged

After the Ethereum merger (PoW to PoS), about 30 million Ethereum is staked, accounting for 25% of the total supply. This staking trend is expected to accelerate due to the major events in the first half of this year - ETF/Restake.

2/ Supply (Deflation)

Unlike most tokens that face token inflation issues, $ETH has been deflationary for 500 days since the merger.

  • [3-4% yield] + deflationary supply (similar to stock buybacks)

may attract TradFi as an attractive investment.

3/ ETH on exchanges

  • 21's - 30 million to 26.8 million

  • 22's - 26.8 million to 19.5 million

  • 23's - 19.5 million to 14.5 million

Every year, the amount of ETH on exchanges decreases by an average of 5 million and is expected to be below 10 million by 2024. If an ETF is approved, this trend could accelerate due to funds like BlackRock/Fidelity holding ETFs.

4/ EIP-4844

The Cancun upgrade is scheduled for release in Q1 2024 and is expected to reduce L2 gas fees by 10x. This could erode the TPS/fee advantage of L1 competitors and could accelerate ETH adoption. Particularly attractive to developers - $ETH is likely to be the only smart contract protocol to receive spot ETF approval this cycle.

5/ Re-staking

Restaking is a key narrative for Ethereum, following the baton taken by Liquid Stake, which recently surpassed 800,000 ETH staked on Eigenlayer, achieving a TVL of $2 billion. The DeFi currency Lego sequence of Restake (LST-LRT-LPD) is expected to lead to “more staking, more outflow from exchanges.”

6/ Big projects are coming

Manta’s $1 billion TVL will serve as a benchmark for upcoming L2 valuations in the market in the coming months. Major Ethereum projects such as LayerZero, StarkNet, and zkSync, each with funding exceeding $200 million, are preparing to launch their tokens in the first half of 2024. In addition, the launch of these major projects is expected to serve as a gateway for new stablecoin inflows.

7/ BTC-ETH Correlation

The BTC-ETH correlation fell below its historical average of 0.71 for the first time since 2021. The launch of a spot ETF signals the possibility of ETH breaking away from the influence of BTC and pricing itself.