The recent crypto market can be described as stagnant. After the sharp drop at the beginning of the month, there is not much room for another sharp drop in the short term, but the willingness of funds to pull up is not strong either.
Driven by ETFs and the "Trump deal," Bitcoin has experienced two rounds of increases. However, both the inflow of ETF funds and the buying power of whales such as MSTR have slowed down recently, and market activity has declined.
At the same time, the gas fee of Ethereum L1 has been below 1 gwei for many consecutive days, even cheaper than Solana, which is known for its low fees. This situation has led to inflation in the supply of ETH, with a net increase of more than 2,000 coins per day, increasing market selling pressure.
Due to the large number of altcoins, stagnant ecological development, and the continuous lifting of restrictions by project parties, the market has been falling and lacks a wealth effect. The meme coin market, which has been popular in the past year, has also experienced a cliff-like decline recently. From the celebrity meme coins issued by Trump and his wife, to the coins issued by the President of the Central African Republic, to CZ's Broccoli and the LIBRA issued by the President of Argentina, short-term surges and plunges have harvested countless investors. The prices of most meme coins fell by more than 90% in a short period of time, and the overall trading volume shrank by more than 80%. For the first time, pump.fun even saw the situation where the MEME coin was not "full" within 30 minutes of deployment. The heat of the meme coin market has cooled down rapidly.
StarEx exchange analysts believe that institutions are unable to buy Bitcoin, retail investors are being harvested by meme coins, and the lack of appeal in the altcoin market has caused market liquidity to stagnate. So, where are the next investment opportunities?
Funds may flow back to Ethereum, bringing certain investment opportunities
Whether in a bull or bear market, there will be structural opportunities in the market. When the hype of meme coins gradually subsides, institutional funds tend to turn to sectors supported by practical applications.
A recent research report released by Grayscale Fund shows that more than 50 large non-crypto companies are building products and services on Ethereum or its L2 ecosystem. These products have nothing to do with traditional cryptocurrency transactions, custody, compliance, etc., but focus on NFT, RWA (real world assets), Web3 development tools and L2 solutions.
Among the 20 financial institutions that have built crypto infrastructure, 10 are banks, and most choose to issue RWA on Ethereum. For example, Franklin OnChain U.S. Government Monetary Fund and European Investment Bank have issued government bonds on Ethereum, and Ethereum is still the preferred blockchain for RWA tokenization.
In addition, the NFT ecosystem still has growth potential. At least 23 institutions have issued NFTs on Ethereum or L2, and it is expected that in 2025, a large number of game companies will still rely on Ethereum L2 to issue NFTs.
Galaxy Research data shows that by 2025, the total supply of stablecoins is expected to double to over $400 billion (currently about $225 billion). Most of the underlying assets of stablecoins are U.S. debt, and the U.S. government supports the development of stablecoins to strengthen the global demand and hegemony of the U.S. dollar.
Institutions can hold Ethereum for a long time when investing in the ecosystem, but for market participants, a more pragmatic strategy is to enter the market when the market falls, especially to buy at the bottom after a leverage liquidation event. Such a strategy can capture the beta returns of the market while controlling risks. When new alpha opportunities emerge in the market (such as the rise of a new large-scale ecosystem), they can actively participate.
Analysts at StarEx Exchange believe that SOL ecological tokens are experiencing capital outflows in the short term, and some funds are flowing back to Ethereum, which may bring about a certain degree of rebound and deserves special attention.
