Written by: Flip Research
Compiled by: TechFlow
ETH bulls vs bears
The $ETH bull and bear camps are now more polarized than ever, with compelling arguments on both sides. Below is my summary of the bull and bear arguments.
Bearish view
After Dencun, profitability has fallen sharply, and this situation does not look likely to change in the short term:
BREAD：
“L2 will make Ethereum deflationary again”
No, they don’t – and we’ve already seen proof of that.
A report on L2, blobs, and why the Ultrasound Money concept is dead without mainnet users.
ETH's market fit is weakening. Crypto purists want to own BTC, regular investors are attracted to $SOL, and $TRX is capturing stablecoin transfers. A "one size fits all" approach no longer works.
L2 is becoming increasingly fragmented. Currently, @l2beat is tracking 71 L2s, 20 L3s, and a staggering 82 upcoming projects. This significantly degrades the user experience and becomes a significant barrier to widespread adoption. At the same time, SOL demonstrates the potential of both a single chain and an ecosystem.
The utility of DeFi is being questioned. Many projects are essentially just stalks with predatory token economics. The high float, low fully diluted market cap model is designed to extract as much value as possible from regular investors and transfer it to the pockets of venture capitalists. (Cobie’s take on this is worth reading)
The lackluster performance of the ETH ETF looks like @rewkang is correct:
Andrew Kang：
Article: Impact Analysis of Ethereum ETF
The Bitcoin ETF opens up the opportunity for many new buyers to allocate Bitcoin in their portfolios. The impact of the ETH ETF is less clear.
Market sentiment for ETH is at an all-time low. Combined with the lackluster performance of ETHBTC and SOLETH trading pairs, we could see a death spiral and an outflow of on-chain Total Value Locked (TVL).
We’ve been conditioned to think of ETH as the “chosen” L1, but in such a nascent industry, this view doesn’t necessarily hold true.
From an institutional and political perspective, BTC is the main focus. Purists like Michael Saylor are advocating for BTC as the most solid form of money, and this narrative does not exist in ETH. ETH is struggling to find similar "supporters".
sassal.eth/acc 🦇🔊：
All my net worth is in this person's hands
"There is no second choice" - Michael Saylor
Bullish arguments
ETH and L2 transaction volumes are reaching all-time highs, while prices are trading near lows. Ethereum has successfully scaled and is ready for the masses:
Source: L2Beat
ETH’s total value locked (TVL) is 10x that of its nearest competitor (excluding L2). L2’s TVL remains locked in the Ethereum ecosystem, and this value should eventually accrue to ETH holders.
ETH remains the main institutional chain, and after years of testing, developer activity is at its highest level. Many of the smartest minds in this space are working together to develop ETH's development roadmap. Any institutional access will be done on ETH, whether it is on-chain tokenization of real assets (RWAs), prediction markets, etc.
AdrianoFeria.eth 🦇🔊 🛡️：
Blackrock is operating a $ETH spot ETF.
They have already issued a stablecoin on $ETH.
They also plan to tokenize funds and various assets.
ETH’s underperformance this year coincides with the shift away from DeFi and toward memes. However, the narrative appears to be changing.
Kaito AI 🌊:
Is DeFi really back?
After being marginalized by other narratives, signs of DeFi recovery are emerging.
Developments like Coinbase’s cbBTC and @VitalikButerin-backed L2 @megaeth_labs could spur a new round of DeFi speculation, while @babylonlabs_io’s upcoming mainnet launch could spark renewed interest in the broader staking/re-staking narrative.
ETH continues to find killer apps this year, @polymarket is a great example. This will only continue, and by the time the next "DeFi" emerges, prices will have already reflected reality - markets are forward-looking.
Nick Garcia：
It's hard to argue that @Polymarket isn't this year's crypto app of the year.
It is on track to reach $475 million in volume and 75,000 new accounts in August alone.
It is commonly cited by pollsters, commentators, ordinary people, and campaigns.
Multiple interoperability solutions in development — in a few years, we may barely need to know which chain we’re connecting to. Protocols include @layerzero_labs, @synapseprotocol, @omnifdn, @wormhole, and many more.
The launch of the ETH ETF took place in a completely different market environment than Bitcoin and was met with poor price performance, which disappointed potential investors. Currently, political and institutional attention is mainly focused on $BTC, but as Bitcoin becomes more and more accepted, people will start to ask: "What's next?" $ETH is undoubtedly the obvious answer to this question.
Market sentiment at all-time lows (ATL) creates opportunities for investors - price movements drive the market narrative. All of the above factors become clear as speculators start to buy the dip, causing prices to rebound upwards.
“The day when ETH reaches $10,000 is bound to come.” — Legendary trader GCR
in conclusion
There are such strong arguments on both sides, which could lead to big price swings in either direction. Although I have a certain bias as an ETH holder, I think the bull argument is more compelling in the long run, especially after this year's price volatility. What's your take on this debate?
