Ethereum at $3,000: issuance, burn and the ecosystem

Transcript

eth hits 3K how high can it go is it too late to buy or do we have room for eth to continue to run now that eth is taking CER stage in the crypto markets we're going to dive into the price action in the short medium term as well as the price of eth and where it might go during the current crypto bull cycle this will help us to create a plan for our portfolio and understand where we should be buying or selling by the way other tokens that are in ethereum ecosystem whether it be l2s D5 projects that are on top of ethereum these are like beta plays to E they act like leveraged eth so the more the eth goes up the more they go up typically if it's a good project and the more the eth goes down generally they will go down further

too so something to understand but when you understand the direction of E helps you understand the direction of your other tokens as well as long as they are ethereum based so this is important to understand for your overall portfolio and exactly what we are going to discuss in today's episode welcome to web through Academy your one trusted Source capitalize on the next big phase of the internet we are here to make sense of an onchain World in constant transformation I'm KY reead your host for today's episode I don't have a poll for you today but what I do ask is that you help us grow our podcast uh and our Channel by liking commenting subscribing all the different things depending on where you are watching or listening if you're on YouTube please subscribe and like that

helps us to grow the channel leave a comment as well if you're watching on Apple I Apple podcast or Spotify then you can make sure you're subscribed so you don't miss next episode and feel free to give us a review or rating as well that also helps us grow all right eth holders if you are excited about eth and that's what we're going to get into in today's episode so I'm going to share my screen right now if you're listening no worries I will make sure to explain exactly what I'm showing on screen but if you're watching then that's perfect up right now I have just a chart of ethereum uh over here on coin gecko we're currently sitting at $2,915 but the reason we are talking about E Today is because it hit $3,000 earlier just a couple hours ago

and this is a big deal we haven't been at 3,000 since April of 2022 and that was actually we were heading on the way down and so it's been a little while since we've been here and it's exciting to get back here I actually have a tweet that I put out back in January where I said that we were going to hit 3,000 by the end of January didn't get that right but directionally was right it was 20 days off I'm okay with that I have no problems there and currently I think we're probably going to hit about 4K by the end of this quarter so I'll go through some of the Char stuff some of the technical stuff there is some concern in the markets in terms of Leverage which I will get into but I think overall We are continuing to go up

by the end of this quarter and I'm going to talk about why I think that is here so 4K by the end of q1 That's My Hope and that's where I think we're going so let's dive into why we're seeing that so first of all let's look at the charts I've been talking about this ascending channel for a few weeks now at least I basically said we needed to reach you know 2750 break out of that and that would really confirm okay this bull market is on and it's time for ether run well we have since breached that last week and we' broken through that channel that we've been in since June of I mean 2022 so basically since we hit the lows of eth around 850 we've sort of just been up and down now again it's a setting channel so we have been you know

obviously going up ever since but really we want to break out of that channel and that shows that we're likely going to go more into the parabolic stages which we have recently broken out of now there's not a lot of technical in terms of where we go from here because we haven't been above 3K for too long for ethereum but we definitely were in 2021 and so we have some numbers to look at which is the 3200 to 3,400 range is probably where we head next we may consolidate there we may see some resistance on that one it's just an area that we sort of spent some time in back in 2021 as well as 2022 so surely we'll we'll hit that at some point and and we might you know find some struggles to get through it really after that though we don't see

much until 4,000 and then after 4,000 alltime highs and then we have nothing from there so those are sort of the key numbers that we're looking at again from what I'm about to talk about in this episode I think there's a lot of bullish signals and a lot of demand for eth that's going to push us through these those are just some key numbers that we might see some struggles on at some point before we reach all-time highs I guess one thing I just want to touch on which is in terms of these charts everything looks good the only thing I would say and I don't have a chart up for right now is lever in the crypto markets is getting pretty high right now if you look any the open interest charts we're hitting some pretty ridiculous numbers and so at some point that's

going to get washed out and we will hit a dip and that dip will be pretty aggressive because a lot of these people who are levered right now will get liquidated so I would not be leveraged if I were you right now continue to buy spot I think there's no issues in buying I mean we're still early on in the cycle but if you're leverag right now I'd be pretty worried or just be very careful on the RSI which is sort of like the momentum of the markets we are looking just overbought here on the weekly and on The Daily definitely overbought on the monthly we're still okay but we're definitely reaching some limits in terms of Leverage and the momentum here so are we going to get a pullback who knows I mean we hit 3,000 this morning and we're already back down to 2900 it's not a big

deal we may see something bigger but again I'm just continuing to buy because I think over you know the weekly monthly We are continuing to go up and up and the reason for that is the supply and demand shock that's happening right now with eth we're also seeing it in Bitcoin but I think it's going to be more aggressive in eth which is why I'm a lot more bullish on eth than Bitcoin right now but what I'm talking about here is so there's a few things on the eth side so one eth continues to burn so it is net deflationary which I'll show just a second we have a lot of eth that's being Stak on an ongoing basis and then ultimately restak on top of that I'm going to talk about why that matters for for Price here in just a second and then

of course we have the potential ethereum ETFs which we now can sort of gauge potential results from that from what's Happening over in the Bitcoin world and so all these mean a lot more demand happening for ethereum whereas we have a net deflationary number in eth so eth the amount of Supply that's said there is going down and we actually have less sell pressure which I'll talk about why that is in just a second so all this really means that we just have a outstanding amount of Demand versus Supply and this generally means that price is going to it's going to Skyrocket so that's what we have to to look forward to here in this in this cycle we've never really had these sort of numbers play out in a bull cycle before meaning so much more people and so much more Capital coming into the

overall industry and when that happens there's no precedent of what can happen but it definitely means bullish numbers for Ethan so let's let's dive into that so if you go to ultrasound. money you can look at a lot of the tokenomics of eth and you can understand its issuance what's being burned Etc and So currently just in the last last day you can see that about 2500 eth has been issued right that goes to validators but you can see that 3,800 so 3,882 eth has been burned so again we are deflationary here if we look at the more long term this is just on a daily basis but if we look at the 30-day uh basis then we're averaging about. 2% of the total e Supply being burned per year so that's pretty

significant and again something we haven't really had in the middle of the bull cycle before we've never really had a deflationary asset so this is obviously going to be a big deal during this cycle but it's not just about Supply need to understand the D demand aspects of this as well and that's really where I think things are going to get out of control in the East world the first reason and really the biggest reason is that currently we're about 25.74% eth stake so what I mean here is of the total supply of eth a quarter of that a little over a quarter of that is State again last cycle we didn't have that we were proof of work we switched over to proof of stake kind of near the end of the last cycle but we've been sitting around like 10 15% of e stakes

and that has really been taking off over over the last few months so now we're sitting at about 26% now why is this a big deal well it's a big deal because one it's demand people want to buy eth because they want to stake it because they can earn three to five% per year on that asset which is a big deal but the second is is when someone Stakes their eth it removes it off the circulating Supply and what that means is that it's not really available to be sold right so when you have a quarter of the entire Supply it's not that it can't be sold it can be but it's very highly not like to be sold because it's currently earning 3 to 5% apy that's a really big deal and that number just continues to go up and up and up now one of the concerns so if

you look at other ecosystems by the way something like salana they're around like 80 to 90% of their entire Supply is state if eth got to that that would be just massive the amount of demand to get there the amount of people that have to buy eth and there would basically be no eth to sell if we got to that point now I don't think we will get that high and that's because things like salana when they launch their token most of it was already being Stak whereas ethereum obviously started in a very different way but what happens here with eth is that the more people stake their eth the less you end up making an API so if this goes to 30 or 40% the yield that you get Goes Down And so there's less incentive to stake and so we've always thought there was going to be some sort of

balance some sort of equilibrium here where maybe we get to 30 and then no more demand comes in for stake because the API the yield is too small but now we have reaking and what reaking does is it finds more ways for these validators to make revenues and so that apy that is going down is now actually starting to go back up because we're finding more networks and more things to validate and to use these ethereum validators for to use the eth asset for and so that API which was originally only going to go down as more people stake is now also going up which just brings more incentive into people to stake their eth and so there's just more and more demand and that's just starting out if we look at the numbers of air which is currently

the only live it's not even live yet but main net is coming but you can already restake it's brought in about 2.6 uh million eth and they're still capped so this is only going to go up from here and again this is driving more demand for eth uh because of that eeld and so I think this is going to be a massive narrative this year and again just another Big Driver of demand for ethereum and so when you combine that plus the amount of people that use eth for defi as collateral and for other where they're locking it up whether it be in layer 2os or in defi there's just a lot of eth that is not on the market right now we have a pro report coming out in a couple weeks on this if you're not yet a pro subscri subscriber in the

show notes below you will see a link to our web TI academy uh newsletter sign up to go pro we're going to do a deep dive into these um Supply dynamics of how much eth is actually not even available to be sold it is a significant amount and as more people come into the industry and want to buy eth but there's no eth on the market it's going to be a really really really big deal so that's the idea here around staking and why this is so bullish for it there's a bunch of different um websites you can look at for staking staking rewards.com if you go to eth is a really good one if you want to look into staking yourself but you can see the current reward rates the amount of staking ratio and you'll see that this number is just continuing to go up and up and up as we go we're

almost hitting a million validators for eth which would be really cool and just again furthering the decentralization of ethereum which I think brings more demand to people wanting to build and use ethereum so all a really big deal now the next big deal for ethereum so regardless of the ETFs which is the next really big deal but regardless of that we have a ton of eth being staked a ton of eth being burned okay but what we have now coming is ethereum ETFs and this is likely going to happen on May 23rd is the projected date here where we have good seven I think eight uh ETF applicants now so we're less than 95 days on the tweet I have up here say 99 but this is a little bit older so about

95 days left before these e ethereum ETFs can get approved and if these get approved the demand that comes on eth potentially is going to be massive let's just look at what's happening over here on bitcoin Bitcoin is having a ton of inflows something about five close to 500 million per day over the last like week in demand um and so that's $500 million in demand for Bitcoin so what that equates to if you look on the Bitcoin side of things is on a weekly basis you have 49,8 77 Bitcoin being bought just by the ETFs on a weekly basis if we look on a weekly basis about how much Bitcoin is being minted right and going to the

miners on a weekly basis it's 6,17 uh Bitcoin so the supply and demand here is just doesn't even make any sense there's so much more demand than there is new Supply now this is just in the in looking at the number of Bitcoin that's being minted new right of course there are other Bitcoin holders that are willing to sell so this isn't the perfect metric by any means but at some point you're going to get Bitcoin in enough people's hands that want to hold it if you continue with this sort of demand of 49,800 Bitcoin being bought every week but there's just not enough Bitcoin being made while you have a massive supply and demand shock Now flip this script and look at the same Dynamic if we have ethereum right let's say you

have similar and won't be the same am demand I'm sure it'll be some percentage less right but whether it's you know 40,000 e or 50,000 or whatever it is whatever that number is okay let's say it's a few hundred million dollars worth of ethereum being bought by ETFs on a daily basis but instead of 6,17 Bitcoin being produced on a weekly basis you have a th000 eth being burned on a weekly basis right so this is a massive massive difference and we're already seeing how much how well Bitcoin is done over the last few months here think about what happens here when this is on ethereum which is being burnt right now and a lot of it is being locked up the other thing you don't have with Bitcoin is there's nowhere to lock up your

Bitcoin right you can't stake with Bitcoin you can't use it as collateral for defi there are becoming l2s so like soon you will be able to put your Bitcoin bridged over to L2 where they get locked up but it's very limited versus something like ethereum whereas when you look at ethereum right now you have this thriving ecosystem both both on ethereum but also on its l2s above it okay the ethereum l2s there's currently 39 active l2s on L2 beat so I have the L2 beat chart up here there's probably more than that that just L2 beat doesn't have but there's 39 and you got to understand that eth from the L1 is getting bridged to every single one of these l2s and once it's moved to an L2 it's not coming back okay and so again it's not just defi it's not just staking

there are l2s that are also sucking in eth and they are not going to bring that back back to an L1 to be sold they remain on the L2 there's currently almost $ 27 billion worth of assets locked up in layer twos now not all that is eth but a large sum of that is eth and the more that l2s continue to acrude demand and get activity and get users and get Capital it means that more eth is going to move to these l2s and basically get stuck there it's like a black hole okay there's 39 active projects so l2s there's 36 on the upcoming projects list 36 new new l2s and in fact there's four layer three projects that are already live now the other big thing and we've talked a ton

about this so I won't go big into this right now is EIP 4844 is scheduled for March 13 which is going to reduce the fees of l2s by somewhere around 10x what I have heard from insiders from within the industry is there is a bunch of l2s that are just waiting to launch after that goes live and so these numbers of 39 current l2s I I think that this number of skyrockets after March 13th which again will just suck up more eth and so it removes more eth off the supply to be sold so this is a really big deal one other thing that I just looked at and this was in another Pro report where we were comparing the different ecosystems so all the different L1 ecosystems one of the things you want to look at is if you

want to understand where the supply of these tokens are going to go in the cell pressure you got to understand where are people building on if there's more developers building on an ecosystem and there's more use cases it means it's going to suck up more of that native token one because you need to use it to transact two because often times you're going to use it for collateral or to bridge Etc and so what you want to understand is where are the developers and right now the ethereum and the L2 ecosystem is just light years ahead of every other ecosystem if you look at eth plus l2s there are over 15,700 monthly active developers in December of 2023 that's the latest numbers that we have so 15734 for if you look at the next closest chain that's binance smart chain

or BNB at650 1,650 so we're almost 10x the second Avalanche is after that at400 near at 1100 and then salon at 436 so again where are the developers building because what that means is that there's going to be more activity more use cases more applications in the future on that chain which is just going to suck up more of that native token if we look at commits so these are people that are putting their code into GitHub again ethereum and l2s are just light years ahead of every other Chain by a long shot just for the number here for those that are are listening you can't see ethereum plus l2's 282,000 commits in December 2023 the next highest was BNB at

28,69596 which is um which is pretty wild because salana was what fourth or fifth in terms of the amount of developers yet they're third in the amount of commits so the developers are run salana are just crushing it but here's a big chart right here which is the number of applications on each blockchain again applications matter because that's where the more activity the more you're going to burn eth the more people need to own eth more demand there is for for eth the ethereum ecosystem has 7,35 applications the second closest is Tron at 1300 EOS that's wild at 584 and then Avalanche at 543 so again it's just so far ahead of every other e system

when this bull market comes and all the mainstream comes back they are going to be using mainly Ethel 2s probably not ethereum and there going to be there already is a ton of applications that exist on top of this ecosystem currently so again Supply and the d diamand d Dynamics here are just unheard of and I don't think people are prepared for what is going to happen here so again I think that in the coming month and a half we're going to be already close to $4,000 in eth somewhere around there maybe there's a dip in between maybe not let's see again we have EIP 4844 happening March 13 we have the ETFs happening in May and so I just think that leading up to that there's going to

be a ton of speculation around those and so I think price has no choice but to go up in the medium term again who knows what happens in the short term but let's look at the long term here let's look at what happens during this cycle so I did a report a few months ago looking at the timing of the tops and the bottoms of each cycle that we've had previously looking mainly at Bitcoin on this one and um the top and the bottoms are very similar in terms of the distance apart from top to top and b top to bottom from each cycle that we've had in crypto and so when we measure it out it appears if it continues along these similar cycles that the top of this cycle is going to be somewhere around October of 2025 the bottom being around December 2026 now

will it play out the exact same as previous Cycles who knows it has done it three times already so can it happen a fourth time potentially as I've said many times we are following I believe we are following the liquidity Cycles which are very cyclical in nature and so I think crypto will just continue to follow that now will it be in October 25 or we top out who knows it could be months different let's not get stuck on the specific month that I have but somewhere in that time frame somewhere in maybe 2025 could even extend out to 2026 is where I think that we will Top out that now a lot of people are saying we've run up really fast previous to other Cycles this time and so maybe this shortens out potentially but I think

when liquidity in terms of governments and central banks printing money and lowering interest rates all that is still yet to come and so I don't think we're topping out in 2024 I think it's somewhere in 2025 where things get real crazy like they usually do like 2021 2017 so if we sort of extrapolate a little bit here and look at that number of October 2025 five what I have up on the screen here by the way is a a log channel or a linear regression Channel where the ethereum price is in on a log chart and basically you can see the gray line here is sort of its trend line anything in the blue is sort of the overbought levels and then anything the purple is the oversold level so in Bull markets we go to overb bot in bare

markets we go to oversold and we always sort of mean revert back to this gray trend line here we are still in the oversold area which is why I believe we still have plenty of room to go this cycle but if we go over to the 2025 top around October again just estimated we sit just at the trend line so just getting back to Trend we're sitting around uh $20,000 e if we were to get back to Trend now will we get back to Trend who knows maybe this log maybe we just stay at Trend or even below we've been going along the oversold to below the trend line for a number of years now but in the past two cycles we've always gone up to the blue area in the first cycle we went to the second blue which is the two

standard deviations over over bot in the last cycle we only made it to uh a little over the first standard deviation overbought so maybe you know if we're going down one each time maybe we only reach the trend which would put us at around 20K if we go super bullish and the supply and demand dyamics work out in the way that I hope that they do who knows we could get up to 50,000 now I don't think we get that high those are a bit ridiculous but anything can happen in crypto either way 20,000 is definitely not out of the cards even if we just stayed on the oversold area here on the um in the purple line we're looking at about 7500 now that to me seems very low we're already above that

in terms of the log chart here and so it's very unlikely that that's as high as we go but I would say somewhere around 10 to 20K is a good chance that we're going to see that this cycle now do we top out there and we only end up hitting 20K for a couple days like when we hit 5K in the last cycle who knows we'll have to see where things are going what the fundamentals are like what the charts are looking like as we reach those numbers but definitely in the coming two years I could see us hitting 10 to 20K no problem the other thing we can look at is just historical charts and compare it to other assets so ethereum and Bitcoin have historically followed very similar paths and I'm just just going to scroll up here and show you the last cycle so the first cycle

that eth went through which was in 2017 I've tracked that here with the first cycle that Bitcoin went through which was 2013 okay and you can see the chart pattern looks almost identical okay we had this sort of blowoff top in this since ethereum went up to about $1,400 and then it just like fell right then we had a couple year bare Market but it tracked almost the same pattern as as Bitcoin did its first cycle then if we look at ethereum's second cycle which was just last the the last cycle we had in 2020 2021 and we compared that to Bitcoin in 2017 its second cycle again very similar numbers in terms of its trajectory the chart was a bit different because we had a double top last cycle whereas previous to this we've only had

one top but ultimately the numers sort of match up and ethereum made it to about 5k on that last cycle which Bitcoin two cycles ago made it to to 20K then if we look at this current cycle and we look at Bitcoin from the last one and we sort of chart out and project where could ethereum hit if it matched the same numbers as Bitcoin in the previous cycle it's about a three and a half X from its alltime high last cycle and so that puts ethereum a little over 15,000 so maybe 16,000 177,000 so again in line with the numbers that I showed on the on the regression chart so we want to look at different angles here to come up with these numbers now I've talked about this before I've showed some of these charts before if you guys follow the channel and so again this is

why I think somewhere between 10 and 20 uh K is a key sort of number where I think we'll we'll hit during this cycle again what time frame do we hit there it's still too far out to to be able to tell these are just based off historical charts and so don't take these with 100% accuracy by any means we want to look now gauge what we think Could Happen build our plan around that and then update as we go which is something I'm going to continue to do on this channel for you and help you understand how these Dynamics change based off of new Innovations based off different competition based off liquidity cycles and different narratives who knows what could happen here so that's sort of what I'm tracking now in terms of my strategy if you've read our Pro reports I do plan

to sell well ahead of this just to make sure that I get good profits if you want to see that strategy Go Pro again the link is in the show Nots if you go pro the moment you sign up you'll get an email with our investment um guide for this cycle where I have a whole article around when I plan to sell and what price points and how I plan to do it so make sure you check that out if you are not already do not want to go into this cycle blind you want to have a plan so let's recap here we are sitting here at let's see where we're at right now currently ethereum sitting at 2900 we tapped 3,000 today which is a really big deal I think over the coming months we continue to go up at some point we will

have a pullback when that is I'm not sure but it's nearing and I believe that because Leverage is really starting to to get high in the crypto market so you don't want to be long right now but it's definitely okay to continue to to buy as long as you have a medium to long-term time frame on your investment if it's shortterm then anyone's guess at this point uh I wouldn't be trying to trade the markets right now I'm just continuing to stack as I always do dollar cost average on a monthly basis and I think this time you know in two months from now the end of q1 maybe even Beyond we're going to continue to go up leading into that ethereum ETF approval that I I do think is going to happen it's not a guarantee but I I have pretty high percentage chance that I think it

is going to happen and then even after that do we have a dip kind of like we did in Bitcoin probably but again we're now further into the bull market interest rates likely to go down in Q2 M more money printing coming in as I've talked about a ton of this show so there's just so many bullish catalysts to come and so there's a lot to be excited about specifically in the ethereum ecosystem but across the entire crypto Market um but right now obviously ethereum is stealing the show um because it's starting to to help perform just a little bit here and I think we'll continue to see that and so I don't hold a lot of Bitcoin at this point I've put most of it into ethereum salana as well as some other assets and I think I'll continue to to let that play out for the

rest of the cycle one last little warning here don't this one up don't get too euphoric don't start trying to trade around you've just plenty of room to grow here we're not even at all-time highs yet and so just do as little as possible continue to stack and I think you're going to do really well this cycle all right hopefully that uh gave you guys a good understanding of where we're at currently with eth and what we can expect to happen in the coming months good luck out there I'll see you in the next one thank you for listening to web through Academy your one trusted source to capitalize on the next big phase of the internet if you enjoyed this episode please share it and subscribe or follow so that you don't miss the next one while you're at it there's a link in the

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