My view on the Ethereum market for the second half of the year.

Source: Dao Says Blockchain

In the comments at the end of Thursday's article, a reader mentioned: the previous market cycle was a double top.

The previous round of the market did indeed create two peaks.

However, there is an不可忽视的因素 that allowed it to emerge from such a market: that is, immediately after the first peak, Ethereum saw a new round of innovation led by NFTs.

The innovation of NFTs is more unique than DeFi------it has transcended its original boundaries. It has impacted celebrities from all walks of life in the traditional ecosystem: including sports stars, talk show hosts, entertainment stars, etc., and has also influenced traditional art institutions-------including some contemporary art museums in countries like the United States and Germany that have incorporated classic NFTs from Ethereum (such as CryptoPunks) into their contemporary art collections; Christie's and Sotheby's have auctioned several batches of top NFTs from the Ethereum ecosystem.

This influence is very rare among all innovations in the cryptocurrency ecosystem.

It is under the leadership of this innovation that the entire cryptocurrency market is able to break out of the second peak, and the second peak even surpasses the first peak.

This is the importance of innovation, and it is also the reason I have always emphasized that the internal factors of the crypto ecosystem are far more important than external factors.

So I wrote in my previous article:

"If the crypto ecosystem itself does not see disruptive and sustained innovative applications and business models in the second half of the year, it is very likely that Bitcoin's performance in the second half will still be strongly influenced by the U.S. stock market."

"If the crypto ecosystem can create miracles in the second half of the year, producing disruptive innovations and applications, then the rise of Bitcoin will follow a different logic."

Bitcoin is like this, and Ethereum even more so.

This round of Ethereum has fallen from nearly $4000 to as low as $1500, and then rebounded to the current $2500. It seems to have sparked some activity in the market again, but in my view, this enthusiasm is quite limited. On one hand, this increase is largely driven by Bitcoin, and on the other hand, it somewhat reflects a recovery from overselling.

Ethereum needs strong innovation to achieve a stable and solid market in the second half of the year.

Although the AI + Crypto sub-ecosystem has begun to regain some vitality, its influence is still not sufficient to spread throughout the entire crypto ecosystem, nor is it enough to become the main driving force behind the rise in Ethereum's market.

Therefore, if the crypto ecosystem does not have strong innovations in the second half of the year and continues as it is now, it will be difficult to break through the previous peak. Even if it can break through the previous peak, that price level will not be stable and may collapse at any time.

A reader asked during the online discussion on Saturday: If Ethereum rises to ten thousand dollars per coin in the second half of the year, will I sell?

First of all, I think that if the entire crypto ecosystem continues to develop lukewarmly in the second half of the year, the likelihood of Ethereum rising to ten thousand dollars is very low; but if it unexpectedly rises to ten thousand dollars, I will most likely sell a significant portion because that price is clearly overvalued.

Unless there is an innovative miracle in the ecosystem, that ten thousand dollars may not be considered high and is worth retaining.

So whether to sell or not depends on the development status of the ecosystem at that time, rather than purely using absolute price levels as the standard.

Regarding the potential for the development of the Ethereum ecosystem, it seems that more and more traditional institutions are starting to build their own infrastructure around Ethereum, especially the layout of domestic internet giants in this area is noteworthy.

For example, Ant Group recently announced that it will build a second layer expansion based on Ethereum.

Relevant executives discussed the details of the layout in this area in an interview, stating that:

Ants build alliance chains in the country, handling domestic business entirely in accordance with domestic laws.

In overseas (Hong Kong), a permissionless Ethereum Layer 2 expansion is constructed as a "public chain." This Layer 2 expansion will not issue tokens. However, since it is permissionless, anyone can deploy applications on it. Nevertheless, the projects issued by Ant on it will still operate in a permissioned manner.

In addition, Ant will use a cross-chain bridge to communicate between the domestic alliance chain and the overseas layer two expansion.

I estimate that this will likely be a typical way for many traditional financial institutions or companies to enter the crypto ecosystem in the future.

These institutions entering the Ethereum ecosystem will benefit Ethereum, but most of the projects they issue have little to do with us retail investors. So far, it is still the Layer 2 expansions built by pure crypto ecosystem teams that are the blessing for retail investors.