Ethereum bull run begins: Institutional funds may become the biggest driving force

The popularity of Ethereum continues to rise, with multiple indicators suggesting that a real bull run may have just begun. Institutional demand could be the key driving force behind this surge, with ETF capital flows and treasury holdings accelerating this trend, and Ethereum may still be undervalued.

Institutional Adoption of Stablecoins

The supply of stablecoins has shown a long-term growth trend. By the end of the second quarter, the supply of stablecoins on Ethereum had reached approximately $140 billion, accounting for the majority of stablecoin supply sources. With the passage of the Genius Bill, this number is expected to increase further.

The concept of stablecoins is gradually entering the public's view. Almost all fintech companies will soon launch their own stablecoins, and the banking sector may take the lead. This will have a profound impact on e-commerce payments and global financial inclusion.

Active loans on Ethereum have increased significantly

Compared to last year, active loans on Ethereum have increased by 98%. This reflects the growing trust and confidence in Ethereum from the market. At the same time, it also shows that users' interest in loans and accessing decentralized finance (DeFi) is increasing.

This trend is closely related to the financial strategies of institutions. Currently, billions of dollars are driving competition among several publicly listed financial companies to acquire more Ethereum assets. This could bring about a "late-stage prosperity effect" in the DeFi market.

Rapid Growth of On-Chain Real World Assets

The scale of real-world assets on Ethereum has reached $7.5 billion, with an annual growth rate of 205%. This figure is expected to experience explosive growth in the future. Stablecoins and stocks that may be on-chain at certain points in the future will become the main driving forces behind this growth.

As more assets are put on-chain, more funds flow into DeFi, and more assets are used as collateral, this will lead to changes in gas fees and further impact Ethereum's burn mechanism. Ultimately, this cycle will drive the rapid development of the entire ecosystem.

The asset management scale on the Ethereum chain reaches a new high

The management of Ethereum's assets continues to improve. The latest data shows that the scale of managed assets for Ethereum has reached 4.11 million ETH, accounting for 3.4% of the total supply. Two weeks later, this ratio further increased to 3.8%, and currently, the total amount of ETH held in ETFs has reached 4.6 million.

Since the establishment of the ETF, the net inflow of Ethereum has reached 5.7 billion USD, equivalent to 20% of the inflow scale of Bitcoin. Currently, the total asset scale of Ethereum has reached 4.6 million ETH, worth about 13 billion USD. In recent weeks, the inflow of funds has increased by another 1.2 billion USD.

ETH Supply Lockup and Exchange Balance Changes

Currently, about 43% of the ETH supply is locked in smart contracts. This indicates that users' confidence in putting assets into DeFi, staking contracts, and using protocols is gradually increasing.

At the same time, the ETH balance on centralized exchanges is almost at an all-time low, the lowest level in the past eight years. This indicates that the supply of Ethereum is flowing from exchanges to on-chain.

Valuation and Price Analysis

The MVRV Z-score is currently 0.8, while 1.04 is the five-year historical average. Historically speaking, the current price is still within a reasonable range. The 200-week moving average also shows that the current price is just above the average line and has not yet reached the levels far above the average line seen in a bull run.

The comparison between market capitalization and TVL is also worth paying attention to. If the TVL of Ethereum can grow to 1 trillion USD, then multiplied by a TVL multiple of 2.5, the price of Ethereum could reach 20,000 USD.

Layer 2 Development and Profit Changes

The usage of Layer 2 has significantly increased, with active addresses, transaction volume, number of users, and transaction frequency all on the rise. Although the fees paid by users have decreased, this may attract more users and further reinforce the network effect of EVM.

Ethereum is in a transition period. If it can maintain product-market fit, there will be opportunities to adjust pricing strategies and further enhance value in the future. The key is to find a balance that allows sufficient value to flow to Ethereum while validating the interests of ETH holders.

Overall, multiple indicators suggest that Ethereum may be in the early stages of a bull run, with the inflow of institutional funds possibly becoming a key factor driving the market. However, it is still in the observation phase, and the price has not yet reached a level sufficient to fully validate this.