When ETH drops below $1800, what is Vitalik thinking about?

By: blockbeats|2025/04/01 03:00:04

Original Title: "What Is Vitalik Thinking When ETH Falls Below $1800"

Original Source: Golden Finance

As ETH continues to plummet and many users are shouting "Fix your eth" under Vitalik's tweets, people are curious about what Vitalik, as the founder of Ethereum, is thinking.

ETH Falls Below $1800 Source: Coingecko

On March 29, 2025, Vitalik posted two blog posts in a row, revealing his current thoughts. Apparently, Vitalik is not particularly concerned about the ETH price.

Below are the two recent blog posts by Vitalik:

First One: The Cyclical Model of Culture and Politics

One thing that has often confused me as I grew up is that people frequently claim that we live in a "deeply neoliberal society" that highly values "deregulation." I am puzzled because although I see many people advocating for neoliberalism and deregulation, the overall reality of government regulation is very different from any regulation that could reflect these values. The total number of federal regulations has been continuously increasing. KYC, copyright, airport security checks, and various other rules are constantly tightening. Since World War II, the percentage of US federal tax revenue to GDP has remained roughly the same.

If you told someone in 2020 that in five years, the US or China would lead in open-source AI while the other would lead in proprietary AI and asked them which would lead where, they might stare at you as if you were asking a tricky question. The US is a country that values openness, and China is a country that values closedness and control; US technology is generally more inclined toward open-source, come on, that's obvious! However, they are completely wrong.

What's going on? In this article, I will propose a simple explanation that I call the cyclical model of politics and culture:

The model is as follows:

How a culture treats new things is a product of the prevalent attitudes and incentive mechanisms of that culture at a particular time. How a culture treats old things is mainly influenced by status quo bias.

Each period adds a new tree ring to the tree, and as a new ring is formed, people's attitudes toward new things also take shape. However, soon these boundaries become fixed and hard to change, a new ring starts to grow, influencing people's attitudes toward the next wave of topics.

We can analyze the above situation and other situations from the following perspectives:

· While there is indeed a trend of deregulation in the United States, this trend was most pronounced in the 1990s (if you look closely, you can actually see this from the chart!). By the 21st century, the tone had shifted towards stronger regulation and control. However, if you look at the specific things that "matured" in the 1990s (such as the internet), you will find that they eventually came under regulation, based on the principles dominant in the 1990s, allowing the United States (and much of the world that followed suit due to imitation) several decades of relative internet freedom.

· Taxation is constrained by budgetary needs, which are primarily determined by the needs of healthcare and welfare programs. The "red lines" in this regard were drawn as far back as 50 years ago.

· Both law and culture consider any moderately risky activity involving modern technology more suspicious than inherently dangerous activities like mountain climbing, which has a very high mortality rate. This can be explained by the fact that dangerous mountain climbing has been something people have been doing for centuries, and attitudes become more entrenched when the general risk tolerance is much higher.

· Social media matured in the 2010s, with culture and politics viewing it both as part of the internet and as a unique entity. Therefore, attitudes of restriction towards social media usually did not extend to the early internet—even though internet authoritarianism was on the rise, we did not see particularly strong attempts to clamp down on unauthorized file-sharing.

· Artificial intelligence matured in the 2020s, with the United States leading and China close behind, so adopting a "complementary commodification" strategy in AI aligns with China's interests. This intersects with the widespread developer support for open-source. The result is an environment of open-source AI that is very real but also quite specific to AI; older tech fields remain closed off, like walled gardens.

More generally, the implication here is that it is challenging to change a culture's approach to existing things and the way in which attitudes toward hardened things are formed. It is easier to invent new patterns of behavior to transcend old ones and strive to maximize our opportunities to obtain good norms. This can be achieved in various ways: developing new technologies is one way, using (physical or digital) communities on the internet to experiment with new social norms is another.

For me, this is also one of the attractions of the crypto space: it provides an independent technical and cultural foundation to do new things without the burden of existing status quo bias. We can bring vitality to the forest by planting and nurturing new trees instead of planting the same old tree.

Second, We Should Talk Less About Public Goods Funding and More About Open Source Funding

For a long time, one topic I have been very concerned about is how to fund public goods. If a project provides value to a million people (and there is no fine way to select who benefits and who does not), but each person only receives a small part of the benefit, then it is likely that no one will feel that funding this project is in their interest, even if the project is very valuable overall.

In economics, the language of "public goods" has a century-old history. In digital ecosystems, especially in decentralized digital ecosystems, public goods are extremely important: in fact, there are good reasons to believe that the average commodity people might want to produce is a public good. Open-source software, academic research on cryptography and blockchain protocols, open educational resources, and more are all public goods.

However, the term "public goods" faces significant challenges. In particular:

1. The term "public goods" is often used in public discourse to refer to "government-produced products," even though it is not a public good in economic terms. This creates confusion because it gives the impression that whether a project is a public good does not depend on the project itself and its attributes, but on who is building it and what their self-proclaimed intent is.

2. It is widely believed that public goods funding lacks rigor, operates based on social expectation bias (sounds good rather than actually good), and favors insiders who can play social games.

For me, these two issues are related: the term "public goods" is easily influenced by social games, largely because the definition of "public goods" is easily expanded.

Let's see what happens when you search for "building public goods" on Twitter. I just did a search, and here are some of the initial results:

You can continue scrolling and find many projects describing themselves as "building a public good."

This is not to criticize individual projects; I am not familiar with the two projects mentioned above, and they may both be great projects. However, both of these examples are commercial projects with their own tokens. There is nothing wrong with being a commercial project, and launching your own token is usually not wrong either. However, when it is so easily diluted to this point, the term "public goods" today seems to refer to just a "project."

Open Source

As an alternative to the concept of "public goods," let's consider the term "open source." When you think about some core examples of digital public goods, you'll find that they are all open source:

· Academic blockchain and cryptography protocol research

· Documentation, tutorials...

· Open-source software (e.g., Ethereum clients, libraries...)

On the other hand, open-source projects seem to default to being public goods. You can certainly come up with counterexamples: if I write software highly tailored to my personal workflow and put it on GitHub, much of the value created by that project may still be owned by me personally. However, the act of open-sourcing (rather than keeping it secret) is certainly a public good, with benefits widely distributed.

One true advantage of the term "open source" is that it has a clear and widely accepted definition. The Free Software Foundation's free software definition and the Open Source Initiative's open source definition have existed for decades, with a natural way to extend these definitions to other areas beyond software (e.g., writing, research).

In the crypto space, the inherent state and multiparty nature of applications, as well as the new centralization vulnerabilities and control vectors implied by these factors, do suggest that we may need to slightly expand this definition: open standards, internal attack testing as introduced in this article, and escape testing can be valuable additions to the FSF + OSI definition.

So, what's the difference between "open source" and "public goods"? Well, let's have the bot give a few examples:

I personally don't agree with the claim that examples in the first category are not public goods. A project having a high contribution threshold does not prevent it from being a public good, and the companies benefiting from that project are as well. Additionally, a project can absolutely be a public good while things around it are private goods.

The second category is more interesting. First, we should note that these five examples are all in physical space, not digital. Therefore, if we want to focus on digital public goods, there's no reason based on the above examples to object to just focusing on "open source." But what if we do want to cover physical goods? Even in the crypto space, there is a zeal for better managing physical things, not just digital ones; in a sense, this is what the whole concept of a networked polity is about.

Open Source and Local Entity Public Goods

Here, we can make an observation: while providing these things at a local level is an "infrastructure building" issue and can be done in an open source or closed-source way, the most effective means of providing these things globally often ends up involving... true open source. Clean air is the most obvious example: a lot of research and development has been done, much of it open source, to help people around the world enjoy cleaner air. Open source can help make any type of public infrastructure easier to deploy globally. The question of how to effectively provide physical infrastructure at a local level remains important – but this issue is equally relevant to democratically managed communities and companies.

National defense is an interesting case. Here, I would like to put forward the following argument: if you create a project for national defense reasons that you are not willing to open source, then it is very likely that, although it may be in the local public interest, it may not be in the global public interest. Weapon innovation is the most obvious example. Sometimes, one side in a war may have stronger moral reasons than the other side, making it reasonable to assist them in their offensive actions, but on average, developing technology to enhance military capabilities does not make the world better. The exception (defense projects that people would want to open source) may actually be related to a "defense" capability; an example could be decentralized agricultural, power, and internet infrastructure that can help people stay fed, functional, and connected in challenging environments.

Therefore, here, shifting the focus from "public goods" to "open source" seems to be the best option. Open source should not mean "anything built with open source is equally noble"; it should be about building and open sourcing things that are most valuable to humanity. But distinguishing which projects are worth supporting and which are not is already the primary task of public goods funding mechanisms, and this is well known.

Original Article Link

On May 13, S&P Dow Jones Indices announced that Coinbase would officially replace Discover Financial Services in the S&P 500 on May 19. While other companies like Block and MicroStrategy, closely tied to Bitcoin, were already part of the S&P 500, Coinbase became the first cryptocurrency exchange whose primary business is in the index. This also signifies that cryptocurrency is gradually moving from the fringes to the mainstream in the U.S.

On the day of the announcement, Coinbase's stock price surged by 23%, surpassing the $250 mark. However, just 3 days later, Coinbase was hit by two consecutive events: a hack where employees were bribed to steal customer data and a demand for a $20 million ransom, and an investigation by the U.S. Securities and Exchange Commission (SEC) into the authenticity of its claim of having over 100 million "verified users" in its securities filings and marketing materials. These two events acted as mini-bombs, and at the time of writing, Coinbase's stock had already dropped by over 7.3%.

Coincidentally, Discover Financial Services, being replaced by Coinbase, can also be considered the "Coinbase" of the previous payment era. Discover is a U.S.-based digital banking and payment services company headquartered in Illinois, founded in 1960. Its payment network, Discover Network, is the fourth largest payment network apart from Visa, Mastercard, and American Express.

In April, after the approval of the acquisition of Discover by the sixth-largest U.S. bank, Capital One, this well-established digital banking company of over 60 years smoothly handed over its S&P 500 "seat" to this emerging cryptocurrency "bank." This unexpected coincidence also portrayed the handover between the new and old eras in Coinbase's entry into the S&P 500, resembling a relay race scene. However, this relay baton also brought Coinbase's accumulated "external troubles and internal strife" to a tipping point.

Side Effects of ETFs

Over the past decade, cryptocurrency exchanges have been the most stable "profit machines." They play a role in providing liquidity to the entire industry and rely on trading fees to sustain their operations. However, with the comprehensive rollout of ETF products in the U.S. market, this profit model is facing unprecedented challenges. As the leader in the "American stack," with over 80% of its business coming from the U.S., Coinbase is most affected by this.

Starting from the approval of Bitcoin and Ethereum spot ETFs, traditional financial capital has significantly onboarded users and funds that originally belonged to exchanges in a more cost-effective, compliant, and transparent manner. The transaction fee revenue of cryptocurrency exchanges has started to decline, and this trend may further intensify in the coming months.

According to Coinbase's 2024 Q4 financial report, the platform's total trading revenue was $417 million, a 45% year-on-year decrease. The contribution of BTC and ETH's trading revenue dropped from 65% in the same period last year to less than 50%.

This decline is not a result of a decrease in market enthusiasm. In fact, since the approval of the Bitcoin ETF in January 2024, the inflow of BTC into the U.S. market has continued to reach new highs, with asset management giants like BlackRock and Fidelity rapidly expanding their management scale. Data shows that BlackRock's iShares Bitcoin ETF (IBIT) alone has surpassed $17 billion in assets under management. As of mid-May 2025, the cumulative net inflow of 11 major institutional Bitcoin spot ETFs on the market has exceeded $41.5 billion, with a total net asset value of $1214.69 billion, accounting for approximately 5.91% of the total Bitcoin market capitalization.

Chart showing the trend of net outflows for Grayscale among the 11 institutions

Institutional investors and some retail investors are shifting towards ETF products, partly due to compliance and tax considerations. On one hand, ETFs have much lower trading costs compared to cryptocurrency exchanges. While Coinbase's spot trading fee rate varies annually in a tiered manner but averages around 1.49%, for example, the management fee for IBIT ETF is only 0.25%, and the majority of ETF institution fees fluctuate around 0.15% to 0.25%.

In other words, the more rational users are, the more likely they are to move from exchanges to ETF products, especially for investors aiming for long-term holdings.

According to multiple sources, several institutions, including VanEck and Grayscale, have submitted applications to the SEC for a Solana (SOL) ETF, with some institutions also planning to submit an XRP ETF proposal. Once approved, this may trigger a new round of fund migration. According to a report submitted by Coinbase to the SEC, as of April, the platform's trading revenue from XRP and Solana accounted for 18% and 10%, nearly one-third of the platform's fee revenue.

However, the Bitcoin and Ethereum ETFs passed in 2024 also reduced the fees for these two tokens on Coinbase from 30% and 15% to 26% and 10%, respectively. If the SOL and XRP ETFs are approved, it will further undermine the core fee revenue of exchanges like Coinbase.

The expansion of ETF products is gradually weakening the financial intermediary status of cryptocurrency exchanges. From their original roles as matchmakers and clearers to now gradually becoming mere "on-ramps and off-ramps" for funds, exchanges are seeing their marginal value squeezed by ETFs.

Robinhood Takes a Stand, Traditional Brokerages Join the Fray

On May 12, 2025, SEC Chairman Paul S. Atkins gave a keynote speech at the Tokenization and Cryptocurrency Working Group roundtable. The theme of his speech revolved around "It is a new day at the SEC," where he indicated that the SEC would not approach enforcement and regulation the same way as before but would instead pave the way for cryptocurrency assets in the U.S. market.

With signs of cryptocurrency compliance such as the SEC's "NEW DAY" declaration, an increasing number of traditional brokerages are attempting to enter the cryptocurrency industry. One of the most representative cases is the well-known U.S. brokerage Robinhood, which began expanding its crypto business in 2018. By the time of its IPO in 2021, Robinhood's crypto business revenue accounted for over 50% of the company, with a significant boost from the Dogecoin "moonshot" promoted by Musk.

In Q1 2025 earnings report, Robinhood showcased strong growth, especially in revenue from cryptocurrency and options trading. Fueled by Trump's Memecoin, cryptocurrency-related revenue reached $250 million, nearly doubling year-over-year. Consequently, Robinhood Gold subscription users reached 3.5 million, a 90% increase from the previous year, with the rapid growth of Robinhood Gold providing the company with a stable source of income.

Meanwhile, RobinHood is actively pursuing acquisitions in the cryptocurrency space. In 2024, it announced a $2 billion acquisition of the long-standing European cryptocurrency exchange Bitstamp. Additionally, Canada's largest cryptocurrency CEX, WonderFi, which recently went public on the Toronto Stock Exchange, also announced its integration with RobinHood Crypto. After obtaining virtual asset licenses in the UK, Canada, Singapore, and other markets, RobinHood has taken a proactive approach in the compliant cryptocurrency trading market.

Furthermore, an increasing number of brokerage firms are exploring the same path. Futu Securities, Tiger Brokers, and others are also dipping their toes into cryptocurrency trading, with some having applied for or obtained the VA license from the Hong Kong SFC. Although their user bases are currently small, traditional brokerages have a natural advantage in user trust, regulatory licenses, and low fee structures. This could pose a threat to native cryptocurrency platforms in the future.

User Data Breach: Is Coinbase Still Secure?

In April 2025, security researchers discovered that some Coinbase user data was leaked on the dark web. While the platform initially responded by attributing it to a "technical misinformation," it still raised concerns among users regarding its security and privacy protection. Just two days before Dow Jones Indexes announced Coinbase's addition to the S&P 500 Index, on May 11, 2025, Coinbase received an email from an unknown threat actor claiming to have obtained customer account information and internal documents, demanding a $20 million ransom to keep the data private. Subsequent investigations confirmed the data breach.

Cybercriminals obtained the data by bribing overseas customer service agents and support staff, mainly in "non-U.S. regions such as India." These agents abused their access to Coinbase's internal customer support system and stole customer data. As early as February this year, blockchain detective ZachXBT revealed on X platform that between December 2024 and January 2025, Coinbase users lost over $65 million to social engineering scams, with the actual amount potentially higher.

Among the victims was a well-known figure, 67-year-old Ed Suman, an established artist in the art world for nearly two decades, having been involved in the creation of artworks such as Jeff Koons' "Balloon Dog" sculpture. Earlier this year, he fell victim to an impersonation scam involving fake Coinbase customer support, resulting in a loss of over $2 million in cryptocurrency. ZachXBT critiqued Coinbase for its inadequate handling of such scams, noting that other major exchanges have not faced similar issues and recommending Coinbase to enhance its security measures.

Amidst a series of ongoing social engineering incidents, although there has not been any impact on user assets at the technical level so far, it has raised concerns among many retail and institutional investors. Especially institutions holding massive assets on Coinbase. Just considering the U.S. BTC ETF institutions, as of mid-May 2025, they collectively hold nearly 840,000 BTC, and 75% of these are custodied by Coinbase. If we price BTC at $100,000, this amount reaches a staggering $63 billion, which is equivalent to the nominal GDP of two Iceland in the year 2024.

Visualization: ChatGPT, Source: Farside

In addition, Coinbase Custody also serves over 300 institutional clients, including hedge funds, family offices, pension funds, and endowments. As of the Q1 2025 financial report, Coinbase's total assets under management (including institutional and retail clients) reached $404 billion. The specific amount of institutional custodied assets was not explicitly disclosed in the latest report, but it should still be over 50% based on the Q4 2024 report.

Visualization: ChatGPT

Once this security barrier is breached, not only could the rate of user attrition far exceed expectations, but more importantly, institutional trust in it would undermine the foundation of its business. Therefore, after a hacking event, Coinbase's stock price plummeted significantly.

CEXs are All in Self-Rescue Mode

Facing a decline in spot trading fee revenue, Coinbase is also accelerating its transformation, attempting to find growth opportunities in derivatives and emerging assets. Coinbase acquired a stake in the options platform Deribit at the end of 2024 and announced the official launch of perpetual contract products in 2025. This acquisition fills in Coinbase's gap in options trading and its relatively small global market share.

Deribit has a strong presence in non-U.S. markets, especially in Asia and Europe. The acquisition has enabled Coinbase to gain a dominant position in bitcoin and ethereum options trading on Deribit, accounting for approximately 80% of the global options trading volume, with daily trading volume remaining above $2 billion.

Meanwhile, 80-90% of Deribit's customer base consists of institutional investors, with their professionalism and liquidity in the Bitcoin and Ethereum options market highly favored by institutions. Coinbase's compliance advantage, coupled with its already robust institutional ecosystem, makes it even more suitable. By using institutions as an entry point, it can face the squeeze from giants like Binance and OKX in the derivatives market.

Facing a similar dilemma is Kraken, which is attempting to replicate Binance Futures' model in non-U.S. markets. Since the derivatives market relies more on professional users, fee rates are relatively higher and stickiness is stronger, making it a significant source of revenue for exchanges. In the first half of 2025, Kraken completed the acquisition of TradeStation Crypto and a futures exchange, aiming to build a complete derivatives trading ecosystem to hedge the risk of declining spot transaction fee income.

With the surge of Memecoin in 2024, Binance, OKX, and various CEX platforms began massively listing small-market-cap, highly volatile tokens to activate active trading users. Due to the wealth effect and trading activity of Memecoins, Coinbase was also forced to join the battle, successively listing popular tokens from the Solana ecosystem such as BOOK OF MEME and Dogwifhat. Although these coins are controversial, they are frequently traded, with fee rates several times higher than mainstream coins, serving as a "blood-boosting" method for spot trading.

However, due to its status as a publicly traded company, this practice is a riskier endeavor for Coinbase. Even in the current crypto-friendly environment, the SEC is still investigating whether tokens like SOL, ADA, and SAND constitute securities.

In addition to the forced transformation strategies carried out by the aforementioned CEXs, they are also starting to lay out RWAs and the most talked-about stablecoin payment fields, such as the PYUSD launched through a collaboration between Coinbase and Paypal, Coinbase's support for the Euro stablecoin EURC by Circle that complies with EU MiCA regulatory requirements, or the USD1 launched through a collaboration between Binance and WIFL. In the increasingly crowded trading field, many CEXs have shifted their focus from just the trading market to the application field.

The golden age of transaction fees has quietly ended, and the second half of the crypto exchange platform game has silently begun.

Arthur Hayes: Why I'm Betting on ETH While the Market Is Obsessed with SOL

"I personally have also allocated 20% to gold, expecting the price of gold to potentially rise to $10,000-20,000 by the end of this market cycle."

CryptoPunks Changes Hands Twice, Did the Originator of NFTs Finally Find Its "Forever Home" This Time?

The original NFT pioneer CryptoPunks has once again officially changed ownership after being sold to the Bored Ape Yacht Club (BAYC) developer Yuga Labs.

The End and Rebirth of NFTs: How the Meme Coin Craze Ended the PFP Era?

There must be another Labubu hidden beneath the ruins.

Key Market Intelligence on May 14th, how much did you miss out on?

Within 24 hours, GOONC's market cap soared to 70 million, could GOONC be the next billion-dollar dog on the Believe platform?

Bitcoin has broken $100,000, Ethereum has surpassed 2500, and is Solana's hot streak about to make a comeback?

The current market is in a state of macro euphoria, with GOONC riding the wave today, skyrocketing 10x in just a few hours, reaching a market cap of tens of millions of dollars, trading volume soaring past 50 million, and rumors swirling that the developer may be from OpenAI (unconfirmed but intriguing enough).

The "gooning" Culture in Forums

A ludicrous and absurd Solana meme that some actually buy into.

GOONC is a meme coin that has sprouted from the "gooning" subculture, offering no technological innovation or practical use, its sole function being speculation.

It takes inspiration from an NSFW term "gooning," which refers to a person being deeply immersed in certain content (you know what), eventually entering a nearly religious-like trance.

In Reddit (such as r/GOONED, r/GoonCaves) and some counterculture media outlets (such as MEL Magazine in 2020), "gooning" has gradually transitioned from an adult label to a meme-addicted, digital content and virtual self-indulgence synonym, arguably the epitome of Degen spirit.

GOONC is playing around with this concept, packaging the addictive nature, uselessness, and irony of gooning into a tradable financial product. The project team has made it clear: "We do not solve blockchain problems, we only trade absurdity." Blunt but oddly genuine.

GOONC launched on May 13, 2025, using the meme coin launch platform Believe App's LaunchCoin module on Solana. This tool is highly Degen: zero technical barriers, a few clicks to create a coin, perfect for projects like GOONC that can come up with ideas out of the blue.

The mastermind behind GOONC is also quite something and is the most talked-about, with KOL @basedalexandoor on X platform (alias "Pata van Goon") personally involved. His profile even caught the attention of Marc Andreessen, co-founder of a16z, making onlookers unable to resist speculating if GOONC has a hint of OpenAI lineage.

While this 'OpenAI Endorsement' is currently just community speculation, it is definitely a good card to play to fuel hype. Saying "we are pure speculation" on one hand, while tagging a few "AI + a16z" on the other.

From Wasteland to Moon in One Night

GOONC took off as soon as it launched. After its launch on May 13, 2025, its market capitalization skyrocketed to $22 million within 4 hours, with a trading volume exceeding $25.6 million in 24 hours. According to platform data, the first day of trading saw an astonishing +41,100% surge, soaring from $0.0000001 to $0.02, becoming a "missed-the-boat" situation.

GOONC quickly formed an active trading community post-launch, with a lot of discussion and trading signals appearing on X platform (such as the 292x return signal provided by DeBot). Liquidity pools on exchanges like Raydium and Meteora grew rapidly, supporting high trading volumes and price increases.

The real climax occurred between May 13 and May 14, with the market cap rising to $5.5 million in the morning and directly surpassing $55 million in the afternoon. By the 14th, it briefly approached a $70 million market cap, with the trading volume soaring to $59 million. Some community members even posted screenshots claiming an increase of +85,000%, creating a new myth out of the ruins.

As of 1:30 pm on May 14, the price stabilized around $0.039, with a total market cap and FDV both around $39.6 million, and a 24-hour trading volume of $5.43 million. Active platforms include XT.COM, LBank, Meteora, and others.

Although there was a slight pullback from the peak ($0.07), the coin's popularity remains strong. For a coin that relies purely on "irony + community + X post" to thrive, this performance is already at a stellar level.

Currently, the background of the token's development team is not transparent, increasing the potential risk of a rug pull. Rugcheck.xyz warns that the creator of the GOONC contract may have permission to modify the contract (e.g., change fees or mint additional tokens), posing certain security risks.

Community members speculate that the meteoric rise of GOONC may be the "last hurrah".

After Surging 40%, Has Ethereum Price Peaked Upon Exiting the Craze?

Whether you are an insider or an outsider, these days you must be familiar with the news about Ethereum. The reason is simple, causing Ethereum enthusiasts to sigh with emotion and almost throwing off-guard those who defend Ethereum, Ethereum, with a "3-day surge of 40%," climbed to the top of the Douyin Hot List.

Where Does the Rally Come From?

As we all know, Ethereum launched the Pectra upgrade on May 7th. This most significant network upgrade since early 2024 integrates the Prague execution layer hard fork and the Electra consensus layer upgrade, significantly improving Ethereum's performance through 11 improvement proposals. The account abstraction feature (EIP-7702) allows users to flexibly manage wallets through social media accounts or multi-signature schemes, reducing the user threshold, attracting more users and developers. The staking mechanism optimization increases the validator ETH cap from 32ETH to 2048ETH and introduces a flexible withdrawal method, making it easier for institutions and individuals to participate in network security, enhancing the market's confidence in Ethereum's long-term value.

At the same time, Pectra optimized the interaction efficiency of Layer 2 networks such as Arbitrum and Optimism, making transactions faster and cheaper, leading to a surge in on-chain activity. As a crucial step for Ethereum's transition from "2G" to "5G," the Pectra upgrade not only enhances network vitality but also "recharges confidence" in the market, directly driving the price increase.

Related Reading: "Ethereum Skyrockets 22% in One Day, E Enthusiasts Rejoice"

It's not just Ethereum itself, as Wall Street also brought important bullish news.

The world's largest asset management company, BlackRock, proposed to the SEC allowing Ethereum ETFs for staking. This proposal is expected to elevate Ethereum ETFs from a mere investment tool to a bond-like "interest-bearing asset," bringing investors both capital appreciation and passive income, igniting market optimism about Ethereum's future potential.

Specifically, BlackRock has proposed to amend its S-1 filing to allow investors to create and redeem ETF shares directly with Ethereum instead of the U.S. dollar (i.e., in-kind redemption). This move, combined with its $2.9 billion BUIDL Fund launched in March 2024, aims to deepen the integration of traditional finance with blockchain. The BUIDL Fund is a tokenized fund operating on the Ethereum network, investing in traditional assets such as U.S. Treasury bonds. This setup is highly attractive to institutional investors, as they can not only benefit from Ethereum's price appreciation but also earn stable cash flow through staking.

Robert Mitchnick, BlackRock's Head of Digital Assets, stated in a CNBC interview in March 2025 that the addition of staking functionality will significantly enhance the appeal of the Ethereum ETF. He admitted that when the Ethereum spot ETF was launched in July 2024 without staking functionality, the market demand was lackluster, and staking could be the key to reversing this trend.

Meanwhile, the SEC's shifting stance on cryptocurrency regulation has also fueled this upward trend. During the tenure of the previous SEC chairman, the regulatory approach was tough, and staking was strictly viewed through the Howey test as a potential unregistered security. Therefore, when approving the Ethereum spot ETF in May 2024, staking functionality was explicitly prohibited.

However, with Trump back in the White House and Paul Atkins taking over the SEC, there has been a noticeable relaxation in crypto regulation. Apart from BlackRock, ETF issuers such as Invesco Galaxy, VanEck, WisdomTree, and 21Shares have also submitted applications for similar staking and in-kind redemption.

Related reading: "New Chairman Takes Office, SEC Transforms into 'Crypto Daddy' Within 48 Hours"

If staking ETFs are approved, the benefits are likely to go beyond price appreciation. The introduction of staking functionality could redefine the role of crypto assets, making them more similar to traditional financial products that provide returns and value appreciation, thereby driving Ethereum closer to mainstream finance.

Currently, the SEC still needs to address several decisions related to crypto ETFs, including whether to approve ETFs for Solana, XRP, Litecoin, and even Dogecoin. With the calls for an "altcoin season" growing louder, Ethereum's strong performance may just be the beginning of a larger crypto market frenzy.

In addition, the Trump family-related DeFi project WLFI is also bullish on this wave of rise, with frequent on-chain activities. According to on-chain data analyst @ai_9684xtpa's monitoring, a WLFI-related address is currently borrowing coins to go long on ETH, borrowing 4 million U from Aave to buy 1590 ETH at an average price of $2515 per ETH.

Has Ethereum's Price Peaked in This Wave?

For this epic surge of Ethereum after half a year of silence, the community has indeed gained more confidence and hope, which has also led to a revival of the entire altcoin market. However, amidst the joy, there are also voices of pessimism. Below is a summary conducted by BlockBeats based on community discussions.

The optimists point out that the current market structure is similar to the eve of the bull markets in 2016 and 2020, predicting a life-changing surge in the next 3-6 months, where some altcoins may even achieve astonishing single-day gains of up to 40%.

@liuwei16602825 stated that this surge signifies the return of the bull market as a sure thing. There is no need to worry about a pullback. The driving force behind the surge uses a high-cost isolated operation, fearing a drop more than any retail investor and will definitely do everything to support the price.

Related Reading: "Ethereum Leads the Surge Triggering the 'Altcoin Season' Speculation, How Do Traders View the Future Market?"

The bears mainly believe that this surge is different from the bull market of 2021, as the current market lacks the confidence of large-scale retail investors entering and holding positions for the long term, with funds rotating too quickly.

@market_beggar observed that a Bitfinex E/B whale has started to close positions and believes that if this whale maintains its high-speed position-closing operation for the next few days, it can be inferred that the whale no longer sees the upside potential of ETH, preparing to take profits and exit. The closing time will be a key focus going forward.

@FLS_OTC stated that there are still many uncertainties at the macro level, and the liquidity cannot support a major bull market. At this stage, it is a "last hurrah," not a complete reversal, and will continue to remain in a short position.

@off_thetarget believes that after ETH transitioned from POW to POS, it lost the "gold standard" of mining machine power cost support. The staking economic model led to a breakdown in value anchoring. Additionally, the L2 ecosystem (such as Starknet, zkSync, etc.) suffered from liquidity fragmentation, failing to establish an effective capital inflow mechanism, causing the collapse of the split disc pattern. Furthermore, the ETH community's excessive pursuit of technical narratives divorced from real-world needs resulted in a weak ecosystem growth. Therefore, he believes that ETH's intrinsic value system has crumbled, and the price is bound to plummet to the 800-1200 range, with a decisive short position at 1800.

@Airdrop_Guard, based on the core logic of the "High Probability Trading Strategy," where three sets of underlying logic different trading systems (such as volume depletion, price supply-demand, long/short position funding rate, etc.) simultaneously issue a short signal at the same point (2580), creating a high-probability trading opportunity. He emphasizes that these systems must be based on different algorithms and logics (rather than mere technical indicator overlays). The current ETH trend aligns with the short conditions in multiple independent dimensions of his trading system, hence the decision to short.

Overall, Bitcoin still maintains over 54% market dominance, and institutional funds' continued preference for it may limit the altcoin's upward potential. The market's future direction will depend on multiple factors, such as Bitcoin's price trend, global macroeconomic conditions, and whether funds can effectively rotate from Bitcoin to the altcoin sector.

Although Ethereum's recent leadership in the market has brought about optimistic sentiment, investors still need to remain rational as different sectors of altcoins are likely to show divergence in trends. Whether this round of Ethereum's rise will usher in a true altcoin frenzy may require more time and conducive conditions.

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