The approval of the Bitcoin Spot ETF in the United States has strengthened BTC's image as a store of value asset and consolidated its macro asset position. In contrast, the fundamental positioning of Ethereum in the encryption field is still uncertain. Competitive public chains like Solana have affected Ethereum's status as the preferred deployment platform for DApps. The growth of Ethereum Layer2 and the decrease in ETH burning seem to have also affected its value accumulation method.

However, we believe that the long-term prospects of Ethereum remain optimistic, with its unique advantages in the smart contract platform, including the strong developer ecosystem of Solidity, the widespread application of the EVM platform, the importance of ETH as collateral for DeFi, and the decentralization and security of the mainnet. Moreover, with the accelerating trend of tokenization, the transformation of real-world assets into digital assets on the blockchain, ETH may have a more positive and active role in the short term compared to other L1s.

Historical trading data shows that ETH embodies both store of value and technological innovation. It is highly correlated with BTC, exhibiting the characteristics of a store of value. However, it can also perform independently during BTC's long-term rise, following market rules driven by technology like other cryptocurrencies. It is expected that ETH will continue to integrate these two characteristics and may reverse its current poor performance and achieve unexpected growth in the second half of 2024.

Narrative of ETH

The role of ETH is longer, ranging from being called Ultrasound money to control supply through production cuts, and being seen as an internet bond that provides non-inflationary stake yields. With the rise of Layer 2 scaling and stake technology, new concepts such as "settlement layer assets" and "universal labor certificate assets" have also emerged.