A market dominated by Ethereum (ETH) could replace the entire altcoin market. As ETH spreads to more protocols and trades as an ETF asset, its importance and dominance is expected to increase.

Some analysts expect ETH could gain in importance and perform better, while other tokens and altcoins lag. The 2024 bull market could also cause token fatigue as well as L2 and L1 token skepticism. An ETH bull run can be much easier to form and sustain than all-asset rallies and pumps.

ETH remains more transparent, with virtually no change in supply since 2022. Of the 120 million ETH in circulation, a large proportion is also locked in staking or lending protocols. This gives ETH an edge over other high-end L1 tokens that still have to show the market can absorb their large unlocks.

Over the past few months, ETH has also been stuck in a range, rarely dipping below $3,000. ETH itself has existed as a utility token for many years, becoming the backbone for DeFi protocols. ETH's relative stability means that projects like Ethena can use it as a source of collateral and the underlying transactions are relatively predictable.

ETH awaits guidance from the decision to launch ETF trading

ETH is also seeing very little hype from general investors and is awaiting guidance from ETF exchanges or another event to drive price action. ETH volatility is increasing, albeit with some caution. The volatility index increased from 1.67% to 2.27% at the end of June. For many months, the dominance rate of ETH market capitalization has also been relatively stable, between 17 and 18%.

ETH Volatility Index | Source: BuyBitcoinWorldwide

Most investors are also undecided about ETH. Both crowd money and smart money are close to neutral, fluctuating between a slight decrease and a slight increase. This relative stagnation has led analysts to view ETH as a “ticking time bomb,” ready to rebound when price action and ETF inflows begin.

ETH is trading at $3,153, up 1.36% on the day. The coin is attempting to break above the 200-day moving average, which could signal a breakout. This past week also saw consistently high trading volume above $13 billion in 24 hours.

Source: X

ETH has recovered from its lows but has yet to return to its yearly highs. Even at nearly $4,000, it failed to trigger a full altcoin season, as most new investors jumped on the meme token hype. The next expected move from ETH will be to reclaim the $3,280 range for a safer rally.

ETH is still far from hitting positions to liquidate above $3,600, but a move into that range could accelerate near-term price gains. The current liquidation heatmap still risks moving down to liquidate more positions below $3,000.

ETH moves to create mainstream adoption

Ethereum has come under attack from Bitcoin maximalists as it continues to lag behind the top coin in terms of capitalization. However, ETH remains the leader in decentralized finance and tokenization, while Bitcoin still lacks a similar DeFi infrastructure.

The current state of the Ethereum ETF means that the asset has yet to attract mainstream attention. Nvidia founder Jensen Huand recently made optimistic comments about Ethereum as a well-established network.

As a unique gauge of mainstream interest, the Grayscale Ethereum Trust is trading at a discount. The fund is currently selling at the equivalent of $2,900 per ETH, slower than the recent spot market recovery. However, the ETHE stock price quickly mirrored the performance of spot ETH during its more bullish periods.

Grayscale retained the majority of its 2.96 million ETH volume, purchased at a much lower price, and has now stopped sending funds to exchanges.

The Ethereum network is tied to other assets, mainly through the altcoin stream. Currently, altcoins still flow from Ethereum into several L2 protocols. However, USDT on Ethereum and other stablecoins may remain in the Ethereum market, if the asset is more promising.

Some predictions see ETH becoming the trigger for altcoin season if investors want to take risks with smaller, more volatile assets.



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