The altcoin season has entered an "accelerator", what impact will the approval of Ethereum spot ETF have on the crypto market?

On May 24, BlockBeats and OKX jointly held a Space event with the theme of "Ethereum spot ETF passed, the altcoin season ushered in the 'accelerator'". The guests included Kiwibig.eth of OKX Ventures, senior crypto trader KOL Unicorn, and Uncle Jian, the owner of J Labs, who shared their interpretation of the impact of the approval of the Ethereum spot ETF and their views on the future market. The following is the transcript of this X Sapce:

BlockBeats: Thank you all for coming. Although we are all acquaintances, please introduce yourself briefly.

Unicorn:We are all old friends. Thank you very much for the invitation from BlockBeats and OKX.

Uncle Jian:I used to focus on airdrops. This year, I am particularly optimistic about the development of blockchain games, so I set up a research institute and hope to communicate with you more.

Kiwi:I am from OKX Ventures, a researcher in the primary market, focusing on the analysis of fundamentals and industry tracks.

BlockBeats: What opportunities do you think the Ethereum ecosystem will have in the second half of the year? What tracks and directions are promising?

Unicorn:We can see that after the approval of the Bitcoin spot ETF and the Ethereum spot ETF, the prices of Bitcoin and Ethereum have been rising. Some other star projects can only barely keep up with the increase in Bitcoin, and some projects need to be particularly excellent in all aspects to surpass the increase in Bitcoin.

In fact, the cycle of Bitcoin's rise in the past has been relatively long. If we follow the rules of the previous bull market, after the Bitcoin halving, Bitcoin will rise first, and then be transmitted to Ethereum. Ethereum will rise, and the rhythm behind it is the take-off of the cottage. Let me first talk about the trend logic of the overall market, or the logic of the bull market. In fact, I think the subsequent performance of the Ethereum ecosystem is closely related to the logic of the bull market. This is the rule of the previous bull market. The logic this time is a little different from the past. This situation has never happened before. Bitcoin has hit a record high, and a large number of altcoins are only 30% to 50% away from the low point, or even closer to the low point.

There may be two reasons. The first is that when the project party raised funds in the past, they directly raised Ethereum and Bitcoin. Therefore, as Bitcoin and Ethereum rose, the assets in the hands of the project party appreciated along with the market.

However, from this round of bull market, a large number of projects have begun to raise USDT, but not Ethereum. Some project parties are unclear about the overall funding plan and do not allocate Ethereum, which leads to the fact that when the project wants to manage the market value, it is found that the amount of funds cannot anchor the increase of Ethereum. On the other hand, in the past cycles, the main funding channels were centralized exchanges and DEXs. When Bitcoin or Ethereum rose, it was easy to transmit to Ethereum's ecological currency, because the profit funds withdrawn from Bitcoin and Ethereum can be quickly transferred to other ecological currencies.

Now Ethereum's spot ETF has not been officially listed. After it is officially listed, it is likely to replicate the rhythm of Bitcoin after listing, but the increase will not be so rapid, because the market has digested a lot of advance expectations, but due to the inflow of funds, the price of Ethereum will still rise.

SEC's approval of Ethereum ETF, everyone says it is a rat warehouse or a speculative plate, and institutions will ship goods to make profits in the near future. Correspondingly, this period of time may be a state of shock for Ethereum. Later, Grayscale's Ethereum will be involved. Grayscale will ship Ethereum, and then other ETF institutions will take over. The amount of other ETF institutions taking over is very large, far exceeding Grayscale, and then the corresponding net inflow of funds for Ethereum will push up the price of Ethereum, so I think it is a state of volatility in the near future. Then with the continuous inflow of funds from ETFs in the long term, the situation of Bitcoin's ETF will still be replicated. So the probability of Ethereum setting a new record high is still very high. After experiencing the previous rounds of bull markets, the general rise of all altcoins is gone forever.

I think the entire industry may have a rotation game in the future. In a certain period of time, there is a star track or a star project, which attracts great attention and has a very high increase. In fact, the increase in rotation can be seen now. It is the increase of rotation game, not the general increase. For example, meme coins are actually far ahead in the rotation. Some time ago, due to the popularity of the global AI concept, the AI tokens also rose sharply. A few years ago, I saw the FET token. The technology of this project is very good, and the product is also good. Because it is an AI concept, I accidentally discovered that FET has risen so many times.

In short, I think Ethereum will experience a period of volatility after recent speculation or insider trading, and then a period of rise. Later, with the continuous inflow of funds, it will hit a record high. However, I don’t think the tokens in the Ethereum ecosystem will rise on a large scale like the past two rounds. There will be a situation of rotation game. Star projects will attract market attention and prices will rise rapidly.

Uncle Jian: I am bullish on the trend of the entire second half of the year. Especially after the Ethereum ETF has greater certainty, the market in the second half of the year is even more worth looking forward to. So I think we should focus on the development of the entire Ethereum ecosystem in the second half of the year.

In fact, Ethereum has been filled with pessimism in the first half of the year. In the group, you often see that the Ethereum ecosystem tokens are not rising, and the project is rubbish. The mood is relatively negative. In comparison, the performance of the Solana ecosystem will be more eye-catching.

Until two days ago, there were rumors that the Ethereum spot ETF was going to pass, and it soared 20% in one day, and everyone's confidence came back all of a sudden. Whether the coin price performance is strong or not largely determines everyone's confidence in the Ethereum ecosystem. Therefore, only when everyone has sufficient confidence will more people be willing to make more contributions to the ecosystem. The entire ecosystem will have more high-quality talents joining, and there will be more sufficient capital inflows, so I think the Ethereum spot ETF has played a role as a booster, bringing more confidence to the builders of the entire Ethereum ecosystem.

So I also believe that more high-quality applications may emerge in the second half of the year. In fact, I have always been optimistic about the development of Ethereum, whether it is its technical ecology or Vitalik's future plan for Ethereum, and even a series of problems that have appeared before, such as network congestion and high gas fees, these problems have gradually had some solutions. So in addition, Ethereum itself has a strong consensus foundation, a large number of users and many high-quality projects, and a very good foundation, so I also think it is very worth looking forward to.

Of course, there is also a problem that needs to be noted. In the short term, the entire market will not rise strongly immediately, because the strong rise of the market must be built up by the entire capital. Now the most lacking thing in the currency circle is actually capital. If there is insufficient capital, the liquidity will be poor. We also found that this round of bull market is indeed very obvious in the rotation of sectors. We have not seen the scene of thousands of coins flying together. When the big cake rose sharply, most of the other sectors were stagnant, and even many altcoins have repeatedly broken new lows. The core reason may be that the entire capital has gone to the big cake. Wait until the price of Bitcoin has almost risen, and then the funds will rotate to sectors such as AI, meme, and DeFi.

In the short term, funds are definitely still in a state of severe shortage, and the market will still be dominated by volatile trends, but in the long run, the market will definitely go up. So the Ethereum spot ETF is a gradual process of promoting the entire Ethereum ecosystem.

Kiwi: Recently, I saw the media mention that the Ethereum Foundation has no dreams. It should be some disputes between Justin Drake and several other leaders of the Ethereum Foundation. I think this is indeed a good feedback for internal governance. The governance of the Ethereum ecosystem has always been a model in the circle, but at the same time, there is indeed a problem of centralization in governance.

The second is that after the Cancun upgrade, everyone believes that Ethereum's gas fee will be reduced. The reduction in gas fees is indeed a major benefit brought by the Cancun upgrade, which can allow more L2 to come in. At the same time, the reduction in gas fees will promote the development of more L2 and L3. One thing that is particularly worth paying attention to in the second half of the year is L2. Everyone still remembers that in the last cycle, Polygon actually started to develop its ecosystem after listing the coin, and then it began to spiral upward.

Arbitrum will now use a lot of funds to build its ecosystem, so the ecosystem with Arbitrum and OP is very good. In fact, it is a positive cycle. Their ecosystem will only start to slowly build the ecosystem after listing the coin. There is no positive cycle on the other two L2s, such as scroll or Taiko, or Starknet.

I think various other L2s are also on the way, such as various NFT L2s, AI L2s, and Depin L2s. Although Ethereum's expansion may be bearish in the short term, it will promote the development of more L2s in the long run. In addition, the Ethereum Prague upgrade is an upgrade that fixes small patches. The next major upgrade may bring Verkle Tree, which is to change Ethereum's Merkle tree to Verkle Tree, which will further reduce the occupancy of Ethereum's state and its storage space nodes, and further decentralize it. This is an innovation point that is worth paying attention to.

In short, no matter what problems the Ethereum Foundation faces in the short term, I am very optimistic about Ethereum in the long run, not only from the perspective of funds and fundamentals. Ethereum has been holding hackathons all the time.

BlockBeats: How do you view the role of the Ethereum Foundation in the Ethereum ecosystem?

Unicorn: When Ethereum was more than ten dollars, the Ethereum Foundation continued to ship Ethereum. Judging from the public address, Vitalik does not hold as many Ethereum as Justin Sun. From the perspective of the Ethereum Foundation, I understand it. The Ethereum Foundation is not as extreme in pursuing money as Justin Sun and SBF. They are more pursuing dreams.

It cannot be denied that Bitcoin has ignited a fire in the currency circle, but Vitalik and the Ethereum Foundation have made blockchain not only have the function of storing value, but also can develop various applications on the chain. Ethereum first proposed the concept of smart contracts, allowing everyone to issue coins on it, and the ecosystem is constantly iterating. The Ethereum Foundation is not so shrewd, not so hurtful, not so fierce in speculating on coins, and not so big in pattern, but it puts a lot of energy on ecological development. In other words, if the Ethereum Foundation's pattern is big enough, then they must have a lot of chips now, and today's Ethereum market value or all aspects may not be as prosperous as it is now. So I think they have a small pattern, they don't have such a big dream, and they sold coins quite early.

Uncle Jian:I feel that the overall feeling of the currency circle is impetuous. However, the members of the Ethereum Foundation will not stand in the perspective of their own interests to make profits for themselves. They are more hoping that their entire ecosystem can develop well. It can really solve some industry problems or bring real value to users.

BlockBeats: After the Ethereum ETF was passed, the market has begun to look for the next ETF target. Currently, SOL is the most talked about. Do you think it is possible? Or are there other targets?

Unicorn:It is not difficult to predict. By the elimination method, the probability of SOL (ETF) passing is quite high. Because Bitcoin and Ethereum have been listed on the Chicago Mercantile Exchange CME for a long time, these are the only two assets in the entire Crypto field that are listed on CME. In addition, the popularity of SOL itself and its audience overlap with those in the United States. The SEC should also take care of the interests of Americans themselves, so I think the possibility of SOL (ETF) passing is quite high.

But it is not the only option. Some overly centralized tokens, as well as tokens that have had disputes and disputes with the SEC or the government in the past, have little hope of passing. For example, Ripple, although it is very old and has a high market value, its chances of passing are not very high. There is also Tron, Justin Sun's personal symbolism is very strong, and it is unlikely to pass. In addition, the platform tokens of exchanges will not pass.

There are also some meme coins. According to the SEC's standards, if you want to list meme coins, you must list DOGE first, but this may bring carnival to people in Musk's faction. So I think the SEC is unlikely to do this.

I think some projects that are too new will not be approved. TON, which has been popular recently, will not be listed because the concentration of chips is too high.

I think it is likely that some projects that have been washed for many years, with a high degree of dispersion of chips, relatively good consensus, and very low risk of being identified as securities will be listed. But I am an old investor, and my thoughts will be guided by the old investor's thinking. So correspondingly, for example, old public chain coins like BCH and SOL, the probability of SEC approval is still very high.

Uncle Jian: I did a vote on X. The first option was SOL, the second option was BNB, and the third option was old coins such as BCH and LTC. The last option was MEME coins such as DOG and PEPE. As expected, the number of people who voted for SOL accounted for the highest proportion, reaching 63%.

In short, the consensus and demand for SOL are indeed strong, but a big problem at present is that the SEC has directly stated that SOL is a security. At present, only tokens that are considered non-securities by the SEC are more likely to pass the approval of ETFs. So this is more mysterious. Unless the attitude of the SEC changes later, the application of SOL ETF will definitely be very bumpy. On the contrary, I think Polkadot's DOT has a certain possibility. Of course, it is definitely not possible at this stage. The biggest problem is that the consensus is not enough. But the advantage of DOT is that it is the only token recognized as software by the SEC. Its problems in user base consensus and capital volume are not unsolvable. With the development of the later ecology, there is still hope for a resurgence. So I think DOT has certain potential.

Kiwi: My own feeling is that SOL actually has a strong demand on the user side, but because the SEC has said before that it is not a security, I think even if it passes, it will go through a very long struggle.

BlockBeats: Actually, the altcoins have not moved yet. Will the altcoin season come back? The funds of Bitcoin ETF have not come to the currency circle, but will there be any difference this time?

Unicorn: I mentioned a word called "rotational game" before. In the future, whether it is the coins of the Ethereum ecosystem or the overall altcoins, the situation of a general rise of ten thousand coins will most likely not be seen again, and a situation of "rotational game" will be created. Why? Because there are so many projects now, and they are mixed. The entire Crypto has developed to a point where there are many ways to play. When I first entered the circle in 2017, the crypto ecological projects were relatively limited. In the early days, I was paying attention to large public chain tokens such as Bitcoin and Ethereum.

To date, although there are a large number of new users coming in, various concepts including AI, games, DeFi, etc., the number of categories and tracks of projects are already incomparable to before. There are so many projects, but there is no capital coming in on the same scale. Big funds still prefer opportunities with certainty, so liquidity is absorbed by projects with higher certainty. This results in most projects not being able to easily achieve large gains like in the last bull market.

Another reason is that the FDV of new projects is relatively high. How high is it? When I was browsing X today, I saw a foreigner who counted the tokens launched from 2024 to date, and the average circulation rate (current circulation divided by total supply) was only 14%.

This number is still in line with everyone's expectations. According to this value, in just less than five months this year, there are 70 billion US dollars of tokens waiting to be unlocked by the projects issued. There are also projects in 2023 and 2022 waiting to be unlocked. A large number of tokens to be unlocked will bring great selling pressure to the market.

So I think everyone should really pay attention to FDV. It is possible that a project will encounter a very embarrassing situation. That is, the project ecology is doing well, the overall valuation and liquid market value have been rising, but the coin price has not risen much. This is because the tokens unlocked by the project have been generating new selling pressure.

The third point is the capital path. A large amount of money flows in through spot ETFs, but this money is difficult to transfer to other altcoins instantly. So it leads to the situation of "rotational game". But I think this round of bull market is still very lively. If you keep guarding a coin and keep waiting, if the team, main force or community of this coin is still constantly building, then the project still has hope.

For some coins, their project parties and even communities no longer exist, which is quite uncomfortable. As an old investor, I will give you an example. During the last bull market, Bytom was still very good, but there was even a rumor that Bytom was going to shut down its mainnet. So if you want to invest in a project, you must follow the pulse of the entire market now. At the beginning of the year, Inscription brought about other derivative projects in the Bitcoin ecosystem, and then the meme coin on SOL rose later. The next one should be the meme coin on the Base chain, including the re-staking in the middle. In fact, there are still many opportunities in the process. These opportunities actually lie in the fact that there is no way to bring about a general rise in all coins in the entire market, but if there is a hot spot, the corresponding funds will gather in a certain track or a certain asset, and the corresponding performance is still very good.

Uncle Jian:I personally tend to believe that the alt season will come, and I think everyone should have sufficient confidence in the market. In this round of bull market, Bitcoin will not be the only one that is crazy. The key is when will the alt season come? I think there are many factors to consider here. It is not that any single factor can determine the arrival of the alt season. But I think we can simplify the logic of thinking. If the alt season is to come, what are the most critical prerequisites? I think it is mainly the three factors of people, time and funds. That is to say, there must be enough people, sufficient time and enough funds. There is a strong correlation between these three. The factor of people is actually easier to understand. That is, more people must pay attention to the market and let more people really participate in it, so that they may be more interested and more confident to trade in the market. Where do these people come from? In fact, there are many ways. For example, the passage of Bitcoin and Ethereum ETFs will inevitably make more people outside the circle want to understand our circle. This will not only bring new people, but also a lot of funds. For example, some very influential events, such as Trump and Biden coming to the crypto circle to canvass votes, will also make more outsiders pay attention to the entire crypto market.

There is another track that I am looking forward to, which is blockchain games. I think games are the easiest scenario for outsiders to enter our circle very smoothly. But we still need to wait for the emergence of a super popular blockchain game.

Why is time also a critical factor? Because it has a lot to do with our risk preference when making investments. For example, if someone outside your circle suddenly comes to you for advice on how to invest in the cryptocurrency circle and what targets to invest in? I think most people will probably recommend Bitcoin first. Because Bitcoin has the strongest consensus and the risk of zeroing is relatively the lowest. After he has a certain understanding of the circle, he will have more needs to understand other ecological currencies, and then we may recommend some altcoins. From such an example, it is a very normal process of capital flow, that is, first to Bitcoin, and then to other altcoin pools, so this matter itself requires a certain period of time.

So what stage are we in now? Now is a stage where people, money, and time are not enough. So I think as an ordinary retail investor, what you need to do is to wait patiently for the arrival of the entire altcoin market. Now that Bitcoin ETFs, and even Ethereum ETFs can be traded later, they can not only solve some of the funding and human problems, but I think they will also accelerate the process, so everyone just needs to wait patiently. If it's fast, it may be in the second half of the year, and if it's slow, it will be at the beginning of next year, which will be the main uptrend of the entire altcoin season.

Kiwi:I also think the altcoin season is relatively certain. It's true that, as Uncle Jian said just now, people and funds have not come in yet, but I think these two problems will be solved slowly. On the user side, games, AI, and the TON ecosystem are all worth paying attention to. At the track level, I think the first thing is that games can still bring a lot of users to the industry, and the quality of games in this cycle is much better than in the previous cycle. I remember that many institutions invested in a lot of 3A games in 21 years, and they have also been delivered in batches recently. Although there are many scams, there are still many good projects that can bring traditional players in, and the wallets and various experiences are also better. And like Telegram, which is more portable and stable, there is a large user base. Another thing is the Bitcoin ecosystem. There are many new people coming in, and various means of attracting new users are still emerging.

I think in this cycle we really need to see some stories with real fundamentals and mass adoption. Although the term mass adoption has been overused, I think if the industry really wants to develop in the long run, mass adoption is still essential. Finding projects that really stick to doing things, gaining users, and then winning the market, these simple truths are actually the most important.

BlockBeats: Let's go back to Bitcoin for the next question. The market has not been very good in the past two months, mainly because Bitcoin has been volatile. So after the Ethereum ETF is passed, do you think Bitcoin will reach $80,000 very quickly? What do you think about the subsequent market?

Unicorn: My point of view is relatively simple: Don't use your ideas, abilities, and opinions to challenge absolute power. Just like the Ethereum spot ETF suddenly showed signs of passing in the past few days, and then it was passed suddenly, and the price rose to $3,700, and the highest should be more than $3,900. In fact, it was caused by the SEC's decision. I think the price of Bitcoin exceeding $80,000 also depends on the Federal Reserve. If the Federal Reserve uses its power in the future and there is an expectation of interest rate cuts, then Bitcoin will reach $80,000 very quickly.

On the contrary, if the Federal Reserve recently stated that it is necessary to maintain high interest rates, it will be more difficult for Bitcoin to reach $80,000. I think the price of Bitcoin is indeed related to the ecological prosperity of the currency circle, but the relationship is not that big, and it depends more on the macro situation.

Uncle Jian:I think it is difficult to predict the price. I think the rise in Bitcoin prices will be affected by many factors. Especially now that the entire Crypto is seriously short of funds, the recent market will still be dominated by oscillating upwards. In other words, the overall market still needs to go through a long period of oscillation and adjustment. Only after the cycle is over, there may be a relatively large opportunity for unilateral rise.

But the most worrying thing about the entire currency circle is some unpredictable black swan events, even wars, and macro-level data impacts, which will make the entire market appear very fragile. Any factor may cause the entire market to fall, and every decline in the market may cause the entire market to enter a new adjustment cycle, which lasts for half a month. So I think the time cycle will not be as fast as expected, and the Bitcoin price will not reach $80,000 so soon.

Kiwi:I think price is also a very difficult topic to predict. Even the best investment institutions or KOLs cannot predict prices. I think the increase in Bitcoin prices in the past two months is due to the realization of expectations, and then there are some new expectations. I think the price still needs to look at the long-term trend. It is difficult to predict in the short term. We have always focused on the fundamentals. It is better for everyone to wait patiently.

BlockBeats: There are many new projects in this cycle, and old projects are still alive, so do you have any tracks and projects that you are particularly concerned about?

Unicorn: Let me first make a guess, and then talk about the state of the Chinese Internet era. In fact, the Chinese Internet was also a state of competition at the beginning, and then Alibaba, Tencent and other large Internet companies slowly occupied the top of the food chain, and then some small and beautiful vertical tracks were derived, and these small and beautiful vertical tracks also have many opportunities.

A similar situation has also appeared in the Crypto field. For example, Bitcoin and Ethereum are actually in a monopoly state. Avalanche, which used to be a public chain concept, has relatively less momentum in this round. Of course, Solana is still very powerful, and the current activity of the SOL ecosystem is unprecedentedly high. So in my opinion, if the head track stands firm, the small and beautiful vertical tracks below still have opportunities. For example, when everyone was competing in the L2 track, Tieshun started to focus on the staking track Blast. Although Blast is not only focused on staking at present, the initial concept is to build a vertical track.

As the big picture has been determined, there are still many opportunities in the vertical field in the future, such as public chains customized for the game track and public chains customized for DeFi, so the entire ecosystem will be more suitable for this track. I think this kind of project will be able to create a new track in the future.

Uncle Jian:As for personal investment, the specific investment target has a lot to do with one's profit expectations. AI is definitely the main theme of this year. Whether it is Web2 or Web3, there will be a lot of hype space. Another is meme, which is "early to win people over", which must be paid attention to in this bull market. There is no particularly strong hit in the chain game sector yet, but we also need to continue to pay attention to the outbreak time of the chain game track.

Each track has a lot of currencies, and the projects are mixed. So my suggestion is to choose the leader first, and the strong will always be strong, which is also very applicable in the currency circle. In addition, we should look for currencies with relatively larger and stronger room for growth. How to judge whether a currency is strong? You can look at the strength of the currency's pullback when the entire market is pinned. If the rebound is faster, the currency is relatively strong.

Kiwi: I am more concerned about the primary market, which may be a bit far from actual transactions. Many of the projects we are concerned about have not yet been launched on the secondary market. I personally prefer two core trends, the first is real technological innovation, and the second is the ability to bring new incremental users. Regarding technological innovation, everyone thinks ZK is rotten, but ZK still has some innovative points, such as the aggregation of ZK Proofs, which is quite interesting. There are also some interesting things in decentralized scientific research, because scientific research is also a very large market.

Game ecology, Bitcoin ecology, TON ecology, all are worth paying attention to. Speaking of Telegram, Telegram has 1 billion users. Last year at a Telegram event, I heard that they hoped that the number of TON users could reach 10% of Telegram, which is 100 million MAU. If converted into industry transaction users, this is also a large scale. TON's goal is to achieve 500 million MAU, so I think the TON ecology is worth paying attention to. In addition, DePin and the mobile phone field can also be paid attention to.

Each ecosystem of DePin has a mobile phone, such as Solana, Aptos, and many new mobile phones are about to be released. Mobile phones are actually important tools for KYC user authentication. So no matter which track it is, as long as it can bring real users to the blockchain, it is a good track.

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群： https://t.me/theblockbeats

Telegram 交流群： https://t.me/BlockBeats_App

Twitter 官方账号： https://twitter.com/BlockBeatsAsia