Under the six major benefits, February will belong to Ethereum
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Six major benefits, driving Ethereum to go bullish
Galaxy Digital plans to officially launch the Galaxy Ethereum Fund, an Ethereum fund, in mid-February. According to documents shared with clients (reviewed by The Block), the private equity fund aims to provide institutional-level exposure to ethereum, primarily to accredited investors, with a minimum investment of $25,000. Launched alongside the fund, there are also two ETH funds targeting domestic and foreign institutional investors. The minimum investment for the onshore institutional fund is $250,000, while the minimum investment for the offshore fund is $100,000.
Grayscale Ethereum Trust did not increase its holdings in January, and will restart private placement subscriptions in February, which will help Ethereum rise.Grayscale posted on its official Twitter on January 30th: "Starting at 5:00 on January 30th, the Grayscale Ethereum Trust Fund (ETHE) resumed private placement subscriptions. The trust fund provides private placements from time to time throughout the year. Qualified investors Daily subscription is now available.” Grayscale’s impact on the encryption market is needless to say; in addition, there has been speculation that Ethereum 2.0 may be regarded as a security by the SEC after the POS mechanism is converted, which will reduce the entry of institutional investors. , Looking at it now, the rumors are self-defeating, which will help to enhance the market's confidence in increasing holdings.
Ethereum futures may be launched in February. Once launched, institutions will further increase their holdings.On December 16, 2020, CME Group announced that it will launch Ethereum futures on February 8, 2021. The new contract will be settled in cash and is currently awaiting regulatory review. Former U.S. Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert reiterated in a December interview with Bloomberg that Ethereum (ETH) futures are on the horizon. If Ethereum futures are launched as scheduled, ETH will take another step towards the ranks of mainstream assets, and more institutions will choose to increase their holdings of ETH, which will help further push up Ethereum.
The amount of Ethereum 2.0 contract pledges is increasing day by day. In the long run, Ethereum may move towards deflation.With exchanges and centralized wallets launching the retail-friendly Ethereum 2.0 pledge method, more and more ETH is pledged in the contract. According to OKlink data, as of 19:00 on February 1, 2021, the number of Ethereum pledged in the Ethereum 2.0 pledge contract has reached 2,893,858. According to previous data, the ETH2.0 deposit contract address has been pledged since November 5th. As of December 1st, the deposit contract address pledged amount reached 867,744 ETH, which means that about 1 million ETH is pledged every month.
According to Vitalik's estimation, the amount of pledges on the beacon chain will reach 10 million ETH. In the next 1-2 years, the overall issuance of ETH (including ETH1.0 and 2.0) will be about 4.7 million per year. At present, the total amount of ETH is about 113 million. According to the annual increase of 4.7 million, by the end of next year, the total amount will reach about 118 million. But among them, part of Ethereum does not actually belong to the category of free circulation, or is circulated in other forms of ETH: the part pledged in the 2.0 beacon chain (estimated at 10 million); the part pledged in DeFi (currently 6.6 million) ; The part of grayscale holdings (currently 2.67 million); therefore, the actual circulation of ETH is far lower than the total amount. In the case of a large number of pledges and locked positions, the actual circulation may even experience deflation. Judging from the current data, Vitalik's estimate is likely to be realized.
DeFi continues to be popular and continues to empower Ethereum.According to data from The Block Research, the trading volume of decentralized exchanges (DEX) exceeded 60 billion US dollars in January, a record high. Among them, the trading volume of Uniswap exceeded 30 billion US dollars in January. It can be said that the fundamentals of Ethereum continue to improve, which provides a good basis for the rise of ETH in the market outlook. In addition, Google Trends data shows that the search volume of "Ethereum" on Google has reached a record high and has surpassed the last round of bull market. The last peak Google search interest for "Ethereum" was on January 13, 2018, when the ETH price peaked at $1,432.88.
The Ethereum expansion problem has been solved to a certain extent, and Ethereum 2.0 is also advancing steadily.At the end of 2020, the Layer 2 expansion solution represented by Loopring became the first zkRollup application case recommended by Google. Many DeFi projects have also begun to consider a full shift to the second-layer solution with Rollup as the core.(Odaily Note: Rollup is mainly divided into two technical routes, Optimistic Rollup and ZK Rollup, which have unique advantages in different application scenarios.)For example, the Optimistic Rollup solution chosen by Synthetix soft-launched the mainnet on January 15, and users are expected to experience it in March; Sushi showed in the roadmap released on January 9 that it will choose ZK Rollups as the expansion solution. Scaling solutions such as Rollup are expected to help Ethereum achieve large-scale commercialization in the financial field, which is very valuable.
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Why the crypto market is increasingly bullish on ETH
Above, we mainly analyzed and introduced Ethereum from the basics, so how do industry leaders think about the future of Ethereum?
Galaxy Digital officially stated: 2021 will be the year of Ethereum. As a growth asset, investing in Ethereum is like investing in a basket of early high-growth technology stocks.
Galaxy Digital is a diversified merchant bank focused on the digital assets and blockchain space, founded by Michael Novogratz (billionaire, cryptocurrency proponent and evangelist). The company has been investing in digital assets since 2013; in 2018, Galaxy Digital Capital Management ("GDCM"), a customer asset management department, was established to invest on behalf of customers. The current asset management scale of GDCM is 815 million US dollars. Known as "Little Grayscale".
Mike Novogratz, founder of Galaxy Digital, tweeted on January 25, 2021: "I had lunch with Joseph Lubin, co-founder of Ethereum and founder of ConsenSys, and couldn't help but want to buy more ETH. This week is a good one." At the beginning of the year, the target price of ETH is seen to be 2600 US dollars."
In stark contrast, Novogratz seems a bit cautious about investing in Bitcoin. Novogratz said on CNBC's "Fast Money" show on July 8, 2020: "My feeling is that bitcoin is outperforming gold, but I will tell people to hold less bitcoin than gold because of volatility. He also does not recommend that investors invest most of their money in Bitcoin; at the same time, he calls for prioritizing gold over Bitcoin.
Domestic tycoons are also becoming more and more optimistic about Ethereum. Leibit mining pool Jiang Zhuoer had previously stated that he had exchanged a large amount of bitcoins for Ethereum. On January 27, he posted a Weibo to further explain why he is optimistic about Ethereum. He believes that there are just-needed projects and users just like DeFi on ETH. For example, mortgage currency borrowing is a just-needed project for users in the currency circle. Which project will users choose for mortgage loans? It must have many users + thick depth + long history (safety), so the "Matthew effect" and "network effect" have a huge impact.
