Core Analysis and Outlook of the Ethereum Market

Ethereum is at a critical turning point driven by a combination of technology, regulation, and economic models, laying a solid foundation for a bullish outlook in the medium to long term.

Firstly, the technological fundamentals have achieved structural optimization. The successful Dencun upgrade has ignited the Layer 2 ecosystem, drastically reducing transaction costs and leading to a large-scale migration of user activities to the L2 network. This not only addresses the long-standing scalability bottleneck of Ethereum but also greatly reinforces its 'moat' as the preferred platform for decentralized applications.

Secondly, regulatory breakthroughs have opened the floodgates for institutional funds. The approval of spot ETFs is a historic event; its core value lies not in short-term price stimulation but in providing a compliant, low-threshold investment channel for traditional financial markets. This indicates that long-term, sustained net inflows of funds will structurally change the supply-demand dynamics of Ethereum.

Finally, the economic model drives continuous supply tightening. Currently, over 32% of the total supply of ETH is locked in staking contracts, while the EIP-1559 mechanism continuously burns transaction fees. The combined effect of these factors leads to a growing scarcity of circulating ETH, creating strong deflationary expectations.

Conclusion and Outlook:

Ethereum is undergoing a profound transformation shaped by 'ETF-driven incremental demand' and 'staking and burning reducing existing supply'. This structural improvement in supply-demand relationships, coupled with its thriving L2 ecosystem, provides strong momentum for value growth. Although the short-term market may face consolidation or be influenced by macroeconomic factors, any pullback should be seen as a window for strategic positioning. In the future, investors should focus on the ongoing fund flows into ETFs and the growth of L2 ecosystem data, as these will be the core indicators for assessing its long-term value trends.