When Wall Street Starts Buying ETH, Ethereum Hits a Milestone

Original Title: The Ticker is $ETH

Original Author: MONK, Messari Analyst

Original Translation: DeepTech TechFlow

The ticker symbol is $ETH.

Wall Street is experiencing a cryptocurrency moment.

Traditional Finance (TradFi) is running out of growth narratives. Artificial Intelligence has been a market darling, but the focus on it has been overdone, and software companies are far less captivating today than they were in the 2000s and 2010s.

At a deeper level, growth investors who know best about investing in innovative narratives and large Total Addressable Markets (TAM) understand that most AI-related company valuations are at absurd premium levels, and other so-called "growth" narratives are no longer easily found. The once-revered FAANG stocks are also gradually transitioning into "quality, profit-maximizing, moderate-growth-rate" composite assets.

For example, the median enterprise value to revenue (EV/Rev) multiple for software companies has fallen to below 2.0x.

Now, at this moment, cryptocurrency has taken the stage.

Bitcoin ($BTC) has hit an all-time high, the U.S. President vigorously promoted our asset in a press conference, and a wave of regulatory tailwinds has brought the cryptocurrency asset class back into the spotlight for the first time since 2021.

BTC, COIN, HOOD, CIRCLE vs. SPY and QQQ (Source: Artemis)

This time, the spotlight is no longer on NFTs and dog coins. This time, it's the era of digital gold, stablecoins, tokenization, and payment reform. Stripe and Robinhood are claiming that cryptocurrency will be a core focus of their next growth cycle; $COIN (Coinbase) has successfully joined the S&P 500 index; Circle is showing the world that cryptocurrency is compelling enough to allow growth stocks to once again ignore earnings multiples.

But how does all of this relate to $ETH?

For those of us crypto natives, the smart contract platform space appears highly fragmented. There's Solana, there's Hyperliquid, and there are a dozen more emerging high-performance blockchains and Rollups (on-chain scaling solutions).

We know that Ethereum's leading position has truly been challenged, facing an existential threat. We also know it has yet to solve the value capture problem.

But I highly doubt whether Wall Street understands all of this. In fact, I would even dare to say that the majority of Wall Street investors are almost completely unaware of Solana. If we are honest, XRP, Litecoin, Chainlink, Cardano, and Dogecoin may have higher external market awareness than $SOL. After all, these people have been indifferent to the entire crypto asset class for several years.

What Wall Street knows is that $ETH represents the Lindy Effect, has been battle-tested, and has been the primary beta investment choice of $BTC for many years. What Wall Street sees is that $ETH is the only other crypto asset with a liquid ETF. Wall Street is enthusiastic about upcoming catalysts and classic relative value investments.

Those suit-wearing investors may not know much about cryptocurrency, but they know that Coinbase, Kraken, and now Robinhood have all decided to "build on Ethereum." With minimal due diligence, they can discover that Ethereum has the largest stablecoin pool on-chain. They will start doing the "moon math" and quickly realize that while $BTC has reached an all-time high, $ETH is still over 30% below its 2021 peak.

You might think poor relative performance looks pessimistic, but these people have a different investment approach. They are more willing to buy assets at a lower price but with a clear target, rather than chasing assets that make them question whether they "have missed the opportunity."

I believe they are already here. Investment authorization is not an issue; any fund can gain crypto exposure through proper incentives. Even though Crypto Twitter (CT) has claimed they won't touch $ETH for over a year, the trading code has shown consistent outstanding performance over the past month.

Year-to-date, $SOLETH has dropped nearly 9%. Ethereum's market dominance bottomed in May and has since marked its longest uptrend since mid-2023.

If the entire Crypto Twitter (CT) has labeled $ETH as the "cursed coin," then why has it been performing so well?

The answer is: It is attracting new buyers.

Since March this year, spot ETF inflows have been consistently growing.

Source: Coinglass

Similar to $ETH, Microstrategy clones are heavily accumulating, providing early structural leverage to the market.

Perhaps some crypto natives have realized their underexposure to $ETH and are starting to rebalance their positions, potentially moving out of the outperformers of the past two years like $BTC and $SOL and into Ethereum.

I'm not saying Ethereum has solved its problems. I think what might be happening right now is that $ETH as an asset is starting to decouple from the Ethereum network itself.

External buyers are driving a paradigm shift in the $ETH asset, challenging our inherent understanding that it can only go down. Shorts will eventually be squeezed. Then, native crypto capital will start chasing the trend until some kind of widespread irrational exuberance for $ETH emerges, culminating in a spectacular top.

If all this really happens, then the All-Time High (ATH) is not too far away.

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