Summary of the heated debate on ETH long and short positions: Listening to both sides leads to clarity, waiting for the market to show direction
In the long run, the bullish argument is more compelling, especially after experiencing the price fluctuations this year.Original Title: “ETH - Where do we stand?”
Author: Flip Research
Compiled by: Deep Tide TechFlow
The Opposition Between ETH Bulls and Bears
The bull and bear camps for $ETH are now more polarized than ever, with compelling arguments on both sides. Here’s my summary of the bull and bear arguments.
Bear Arguments
- After Dencun, profitability has sharply declined, and this situation does not seem likely to change in the short term:
BREAD :
"L2 will make Ethereum deflationary again."
No, it won't— we have instances that prove otherwise.
A report on L2, blob and why the concept of Ultrasound Money has failed without mainnet users.
The market fit for ETH is weakening. Crypto purists want BTC, while ordinary investors are attracted to $SOL, and $TRX is capturing the transfer of stablecoins. The "one-size-fits-all" approach is no longer applicable.
L2 is becoming increasingly fragmented. Currently, @l2beat is tracking 71 L2s, 20 L3s, and an astonishing 82 upcoming projects. This significantly diminishes user experience and becomes a major barrier to widespread adoption. Meanwhile, SOL demonstrates the potential of a monolithic chain and ecosystem.
The utility of DeFi is being questioned. Many projects are essentially just memes with predatory token economics. High throughput and low fully diluted market cap models are designed to extract as much value as possible from ordinary investors and transfer it to venture capitalists. (Cobie's take on this is worth a read.)
The performance of ETH ETFs has been lackluster, and it seems that @rewkang is correct:
Article: Analyzing the Impact of Ethereum ETF
Bitcoin ETFs have opened up opportunities for many new buyers to allocate Bitcoin in their portfolios. The impact of ETH ETFs is less clear.
Market sentiment for ETH is at a historical low. Combined with the lackluster performance of the ETHBTC and SOLETH trading pairs, we may see a death spiral and outflow of total value locked (TVL) on-chain.
We have been conditioned to think of ETH as the "chosen" L1, but in such an emerging industry, this view may not necessarily hold.
From an institutional and political perspective, BTC is the main focus. Purists like Michael Saylor are advocating for BTC as the hardest form of money, a narrative that does not exist for ETH. ETH is struggling to find similar "supporters."
All my net worth is in this person's hands.
"There is no second choice," ------ Michael Saylor
Bull Arguments
- Trading volume for ETH and L2 has reached an all-time high, while trading prices are near lows. Ethereum has successfully scaled and is ready for the masses:
Source: L2Beat
The total value locked (TVL) in ETH is 10 times that of its recent competitors (excluding L2). The TVL of L2 remains locked within the Ethereum ecosystem, and this value should ultimately belong to ETH holders.
ETH remains the primary institutional-grade chain, having withstood the test of time, and developer activity is at its highest level. Many of the smartest minds in this field are collaboratively developing ETH's roadmap. Any institutional access will occur on ETH, whether it’s on-chain tokenization of real-world assets (RWAs), prediction markets, etc.
Blackrock is operating a $ETH spot ETF.
They have issued a stablecoin on $ETH.
They also plan to tokenize funds and various assets.
- ETH's poor performance this year aligns with the trend of moving from DeFi to memes. However, the narrative seems to be changing.
Kaito AI :
Is DeFi really back?
Signs of a DeFi revival are emerging after being marginalized by other narratives.
Developments like Coinbase's cbBTC and L2 supported by @VitalikButerin @megaethlabs may stimulate a new round of DeFi speculation, while the upcoming mainnet from @babylonlabsio could spark renewed interest in broader staking/re-staking narratives.
ETH continues to find killer applications this year, with @polymarket being a great example. This situation will only continue, and by the time the next "DeFi" emerges, prices will have already reflected reality— the market is forward-looking.
It’s hard to say @Polymarket isn’t the crypto application of the year.
It is expected to reach $475 million in trading volume and 75,000 new accounts in August alone.
It is widely cited by polling agencies, commentators, ordinary people, and campaigns.
Various interoperability solutions are being developed— in a few years, we may hardly need to know which chain we are connecting to. Protocols include @layerzero_labs, @synapseprotocol, @omnifdn, @wormhole, and more.
The launch of the ETH ETF is occurring in a market environment completely different from Bitcoin and has faced poor price performance, disappointing potential investors. Currently, political and institutional attention is primarily focused on $BTC, but as Bitcoin gains wider acceptance, people will start asking, "What’s next?" $ETH is undoubtedly the obvious answer to that question.
Market sentiment at historical lows (ATL) creates opportunities for investors— price volatility drives market narratives. As speculators begin to bottom-fish, all the above factors gradually become clearer, leading to a price rebound.
"The day ETH reaches $10,000 is destined to come." ------ Legendary trader GCR
Conclusion
Both bulls and bears have such strong arguments that this could lead to significant price volatility in either direction. Although I have a certain bias as an ETH holder, I believe the bull arguments are more compelling in the long run, especially after experiencing this year's price fluctuations. What is your stance in this debate?
