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

The popularity of Ethereum continues to heat up, and the real bull run may have just begun. This article will deeply analyze the fundamental performance of Ethereum in the second quarter and share 10 charts with the most bullish signals.

Institutional demand may become a key driver of this rally, as the flow of funds into ETFs and the holdings by the treasury are accelerating this trend. Despite the significant recent gains, Ethereum may still be undervalued.

In addition, this article will also delve into the Genius Bill, the growth trend of stablecoins, on-chain real-world assets, and the key on-chain indicators that may drive the next bull run of Ethereum.

Highlights of Insights

• Bitcoin funds are gradually flowing towards Ether, and this early rotation trend may continue for a longer time and have more far-reaching effects.
• With the support of Genius Bill, all major banks will also launch their own stablecoin strategies.
• The market's trust and confidence in Ethereum is continuously increasing.
• The asset scale on Ethereum has currently reached 7.5 billion USD, and this figure is expected to experience explosive growth in the future. Stablecoins and stocks that may go on-chain at certain points in the future will be the main drivers of this growth.
• The crypto market has a strong reflexivity, and sometimes the key factor driving market development is actually the price of Ether itself. An increase in Ether's price attracts more assets to be put on-chain, more users to enter the on-chain ecosystem, and at the same time, other fundamental factors will also improve.

Key Data

• Active loans on Ethereum increased by 98%
• The on-chain RWA annual growth rate has reached 200%
• The asset management scale on the Ethereum chain has reached an all-time high.
• The ETH balance on the CEX is at a historical low.

Institutional Adoption of Stablecoins

The current supply of stablecoins on Ethereum has reached approximately $140 billion. This figure has accounted for the majority of the sources of stablecoin supply and is expected to increase further.

Genius Bill may complete legislation within this week. If passed, this will further drive the growth of stablecoin supply on Ethereum. More and more financial institutions are considering issuing their own stablecoins.

Active loans on Ethereum have increased by 98%

Compared to last year, active loans on Ethereum have increased by 98%. This reflects the growing trust and confidence in the market towards Ethereum. At the same time, we may also observe more re-mortgaging cycles, which means that the activity within the Ethereum ecosystem is significantly increasing.

The on-chain RWA annual growth rate has reached 200%

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

The asset management scale on the Ethereum chain has reached a historic high.

As of June 30, the managed asset scale of 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.

43% of ETH supply is locked in smart contracts, ETH balance on CEX is at an all-time low.

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 CEX is almost at a historical low, the lowest level in the past eight years.

ETH once fell below the 200-day moving average, setting a historical low.

The MVRV Z-score is approximately 0.8, close to the historical standard of five years. In the long term, the current price range still falls within a reasonable value range. Earlier this year, the price of ETH even fell below the 200-week moving average, reaching a historic low.

Comparison of Market Capitalization and TVL and Bull Run Data Model

The comparison of market value and TVL can be seen as the "book value" in the blockchain domain. If the TVL of Ethereum can grow to 1 trillion USD, and then multiplied by a higher TVL multiple, say 2.5, then the price of Ethereum could reach 20,000 USD.

Performance and Yield of ETH L2, Comparison between Bear Market and Bull Run

Although the changes on Layer 1 are not significant, the block space on Layer 2 has increased significantly. The usage of Layer 2 has grown considerably, with not only active addresses and transaction volumes increasing, but also the number of users and transaction frequency continuing to rise. Although the fees paid by users have decreased, this may be a good thing, as lower fees can attract more users and further strengthen the network effects of EVM.