Ethereum and its competitors are all that matters
$69k is indeed an important meme, but you also need L1s and L2s to trade other memes
Weekly musing: memes and fees are high.
Sunday I discussed how BTC was about to test $69k and that’s what we got. The orange coin briefly printed an ATH Tuesday, but it didn’t conquer that level, promptly dipping to $59k. All major risk assets also experienced record demand. What’s next?
Well, this flush was required to tame the euphoria of leveraged bulls. As traders got liquidated, funding rates reset and it made sense to go long again. That’s why the current bounce looks strong and why it seems we’re poised to test $69k again.
What can happen after that? We either fail again and are forced to wait for a crucial third attempt - which would be rather healthy - or else the pump goes on. If it goes on things will surely get wild faster than most anticipate. Are you ready?
To better prepare yourself for any scenario there are two things to consider: where we are in the overall crypto cycle and the state of Ethereum and its various competitors. Because BTC is a clear winner already, but what about other L1s?
Regarding the former, I think we’ll have some mini-cycles within this cycle. This is aligned with the cautious AI-phoria and meme-mania reports I’ve been sharing, while at the same time pairing nicely with the fact this bull just started.
Some people are resurfacing this as the supercycle thesis infamously popularised by Su Zhu and Kyle Davies in 2021. But that entails an absence of significant drawdowns and I believe we’ll still have them without ending the bull just yet.
Why? Because if everyone is predicting the top then will it really be the top? No, that goes against the basic dynamics of any market. Instead, we’ll probably have more moderate ebbs and flows this time until real euphoria kicks in and blinds us.
Regarding the latter, Ethereum has finally woken up and is about to hit $4k for the first time since 2021. Still, gas fees are high and, memes aside, a plethora of L2s and competing L1s are working hard to replace the smart contracts king.
While Solana continues to be extremely well positioned to be the king of this cycle, some of Ethereum’s 44 currently active L2s also have thriving ecosystems and with the upcoming Dencun upgrade will benefit from near-zero fees!
We’ll have to see if that suffices to keep Ethereum exciting for retail traders or if the original dApp chain will remain focused on big players. Meanwhile, let’s see how the metagame evolves and how much exuberance can we experience!
Chart art: funding and open interest are high.
Three things: ordinals and attention flow are high.
Kelxyz explains (or takes from Cobie) what is the “memecoin supercycle”.
BWeys explains why the Bitcoin Ordinals crowd is going wild with RSICs.
Comm. Hester Pierce wrote the best dissent ever about the SEC’s crypto stance.