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Ethereum: The Best Buy in Crypto Right Now?

Lincoln Murr

Summary: The Ethereum ETF approval was one of the year's most unexpected yet significant pieces of news. However, despite this announcement, Ethereum has numerous tailwinds and signals that now might be a great buying opportunity. Let’s dive into Ethereum’s current state, future outlook, and the impact of the ETF. Before the ETF, Ethereum had been performing ...

The Ethereum ETF approval was one of the year's most unexpected yet significant pieces of news. However, despite this announcement, Ethereum has numerous tailwinds and signals that now might be a great buying opportunity. Let’s dive into Ethereum’s current state, future outlook, and the impact of the ETF.

Before the ETF, Ethereum had been performing relatively poorly this year, with Solana taking most of the spotlight. A few days before the ETF approval, ETH’s price in BTC was near a multi-year low, and the sentiment around Ethereum was generally negative on X. Solana had been receiving much more attention, primarily driven by retail traders speculating on memecoins and using the network for its fast speeds and low transaction costs. Its lack of use and events like the Ethereum Foundation’s subpoena earlier this year made ETH an undesirable asset for many investors and one that incoming retail traders did not find valuable. 

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The ETF has completely changed the expectations for Ethereum going forward, making even the strongest Bitcoin bulls like Michael Saylor, who previously called ETH a security and said there “is no second best” to Bitcoin, to recognize the legitimacy of the crypto asset class and DeFi. Institutional interest seems to be high for Ethereum, with investors like Citadel CEO Ken Griffin stating in 2021 that he thought Ethereum would replace Bitcoin, Carl Icahn expressing preference for ETH over BTC, and BlackRock CEO Larry Fink’s focus on asset tokenization. BlackRock has gone so far as to use Ethereum for their onchain treasury-backed fund – likely just the beginning of their use of Ethereum. Though interest in the ETF is only anticipated to be around 20-25% of that of Bitcoin’s ETFs, given the difference in market capitalization,, it should still significantly impact the value of ETH. 

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One of the SEC's concessions for the ETFs' approval was the removal of ETH staking for ETF holders. While this might be perceived as a negative since it prevents ETF investors from getting the highest returns and having their ETH earn a dividend, it keeps the yield higher for other participants, meaning holding native ETH has never been more valuable. 

Beyond the ETF, Ethereum has various upgrades and infrastructure improvements that should drastically increase its usability and assist it in becoming a key player in the “Fourth Industrial Revolution,” as investor Paul Tudor Jones believes. Ethereum’s future roadmap is highly complex, with several goals being pursued simultaneously, each with its unique rhyming name. The Surge aims to bring Ethereum to 100,000 transactions per second on rollups, enough to handle millions, if not billions, of users easily. The Scourge aims to make Ethereum credibly neutral, removing power from specific entities that could prevent transactions from being included in blocks. The Verge makes Ethereum more efficient for validators, paving the way for nodes to be run on smartwatches and other minuscule devices using zero-knowledge technology. The Purge removes some of the technical debt acquired over years of development, and the Splurge introduces better user experience features and other miscellaneous improvements. When completed, this endgame Ethereum will be fully verifiable, efficient, fast, and cheap and be an ideal candidate to build the next generation of the internet. 

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Though Ethereum has been criticized for its fragmented L2 landscape and the complexities of cross-rollup interactions, several solutions are being built to address these issues. The AggLayer and other similar solutions promise to bring cross-chain communication to rollups, allowing liquidity and actions to seamlessly flow between rollups without the user realizing they are interacting with multiple chains. Coinbase’s Smart Wallet, expected to release in the next few weeks, will make creating an account and interacting onchain look no different than web2, with no requirement for storing private keys or understanding transaction fees. 

The impact of EigenLayer, one of the most-hyped protocols in recent history, cannot be overstated either. It will expand Ethereum's value beyond securing the network into infinite other applications, from proving cryptography to securing oracles. 

The future of Ethereum looks brighter than ever because of the ETF and future technical upgrades. Metrics around transaction volume and activity on L2s are at an all-time high, and infrastructure development has rapidly progressed. Ethereum is well-poised for the future and may power all financial applications one day.

By Lincoln Murr

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