In the comment at the end of the article on Thursday, a reader mentioned: The previous market trend formed a double top.
The previous market trend indeed formed two tops.
However, there is an unavoidable factor that enabled such a market trend: immediately after the first top, Ethereum experienced a new wave of innovation led by Non-Fungible Token (NFT).
Moreover, the innovation of NFT is more unique than DeFi - it went viral. It influenced celebrities from various traditional sectors: including sports stars, talk show stars, entertainment stars, and even traditional art institutions - some contemporary art museums in countries like the United States and Germany have collected classic NFTs from Ethereum (such as CryptoPunks) into their contemporary art collections; Christie's and Sotheby's have auctioned several top-tier NFTs from the Ethereum ecosystem.
This influence is extremely rare among all innovations in the crypto ecosystem.
It was under the leadership of this innovation that the entire crypto market could form a second top, and this second top even exceeded the first top.
This demonstrates the importance of innovation and why I have always emphasized that internal factors of the crypto ecosystem are far more important than external factors.
Therefore, in my previous article, I wrote:
"If the crypto ecosystem itself does not produce disruptive and sustainable innovative applications and business models in the second half of the year, Bitcoin's trend will likely still be strongly influenced by the stock market"
"If the crypto ecosystem can create a miracle and generate disruptive innovations and applications in the second half of the year, Bitcoin's rise would follow a different logic"
This is true for Bitcoin, and even more so for Ethereum.
In this round, Ethereum dropped from nearly $4,000 to as low as $1,500, and then rebounded to the current $2,500. It seems to have reignited market enthusiasm, but in my view, this enthusiasm is also quite limited. On one hand, this rise was largely driven by Bitcoin, and on the other hand, it somewhat reflects an oversold rebound.
For Ethereum to develop a stable and solid market trend in the second half of the year, it also needs powerful innovation.
Although the AI + Crypto sub-ecosystem has begun to recover some vitality, its influence is not yet sufficient to spread across the entire crypto ecosystem, nor is it strong enough to become the primary driver of Ethereum's price increase.
Therefore, if the crypto ecosystem continues to lack powerful innovation in the second half of the year, it will be difficult to break through the previous high. Even if it does break through, that price level would not be stable and could collapse at any time.
A reader asked during an online exchange on Saturday: If Ethereum rises to $10,000 per coin in the second half of the year, would I sell?
First, I believe that if the development of the entire crypto ecosystem remains lukewarm like now, the possibility of Ethereum reaching $10,000 is very small; but if it unexpectedly reaches $10,000, I would likely sell a significant portion, as that price would clearly be an overvaluation.
Unless the ecosystem experiences an innovative miracle, $10,000 might not be considered high and would be worth holding onto.
So whether to sell depends on the ecosystem's development at that time, not solely on an absolute price point.
Regarding the potential development of the Ethereum ecosystem, it seems that more and more traditional institutions are beginning to build their infrastructure around Ethereum, especially the domestic internet giants' layout, which is worth noting.
For example, Ant Group recently announced that it will build a second-layer expansion based on Ethereum.
Related senior executives discussed the details of this layout in an interview, roughly meaning:
Ant will build a alliance chain in China, handling domestic business entirely in accordance with domestic laws.
Overseas (in Hong Kong), it will build a permissionless Ethereum second-layer expansion as a "public chain". This second-layer expansion will not issue its own token. However, because it is permissionless, anyone can deploy applications on it. Nevertheless, Ant's own projects on it will still operate in a permissioned manner.
Additionally, Ant will use a cross-chain bridge to communicate between the domestic alliance chain and the overseas second-layer expansion.
I estimate this might become a typical approach for many traditional financial institutions or companies entering the crypto ecosystem.
These institutions entering the Ethereum ecosystem will be beneficial to Ethereum, but most of their projects will have little to do with retail investors. Up to now, second-layer expansions built by pure crypto ecosystem teams are still the paradise for retail investors.
