10 Bullish ETH Charts | Michael Nadeau
14 hours ago•Bankless
Podcast41 min 10 sec
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Quick Insights

The analysis presents a strong bullish case for Ethereum (ETH), which is showing relative strength against Bitcoin (BTC) and may be entering a capital rotation phase. Key drivers include massive institutional inflows into ETH ETFs and a shrinking available supply, with valuation metrics suggesting it is not yet overvalued. For direct exposure, consider accumulating ETH itself while monitoring the ETH/BTC ratio for continued outperformance. For indirect stock market exposure, consider BitDigital (BTBT), a company that pivoted entirely to holding ETH, or the Bitwise Ethereum Strategy ETF (BMNR), which recently gained a significant investment from Peter Thiel. A major upcoming catalyst to watch is the potential passage of the "Genius Act" for stablecoins, which could accelerate institutional adoption on the Ethereum network.

Detailed Analysis

Ethereum (ETH)

  • Price Action & Sentiment: At the time of recording, ETH was priced at $3,255. The speakers noted a bullish sentiment and a significant shift where ETH has been rising on days when Bitcoin has been falling. This suggests a potential "decoupling" and the beginning of a capital rotation from BTC to ETH.
  • Institutional Adoption:
    • Corporate Treasuries: There is a major trend of public companies adding ETH to their balance sheets, with a nearly 6,000% increase in ETH held in public treasuries. This is seen as a parallel to Michael Saylor's strategy with Bitcoin, which legitimized it as a treasury asset.
    • ETF Inflows: ETH ETFs are seeing strong inflows, with assets under management (AUM) at an all-time high.
      • As of the report, 4.6 million ETH (worth $13 billion) were held in ETFs.
      • Net flows since inception are $5.7 billion, which is more than 20% of Bitcoin ETF flows in a shorter time frame.
      • Recent inflows totaled $1.2 billion in just a few weeks, signaling strong institutional demand.
  • On-Chain Fundamentals:
    • Stablecoins: The speakers view stablecoins as "crypto's ChatGPT moment." The potential passage of the "Genius Act" (stablecoin legislation) is seen as a massive catalyst that could bring major banks and fintechs like Stripe and PayPal onto Ethereum.
      • Ethereum's ecosystem (L1 + L2s) currently hosts ~55% of all stablecoins.
    • DeFi Activity: Active loans on Ethereum and its Layer 2s are at all-time highs, up 98% year-over-year. This indicates growing trust and demand to use ETH and other assets as collateral in DeFi.
    • Real-World Assets (RWAs): The value of RWAs on Ethereum has seen "hockey stick like growth," up 205% year-over-year to $7.5 billion. This is considered a huge area for future growth, with a potential market in the hundreds of trillions.
  • Supply Dynamics (The "Store of Value" Case):
    • Low Issuance: ETH's supply is growing at a very low rate (annualized at ~0.45%), which is currently less than Bitcoin's (~0.85%) and gold's. This is happening even during a period of lower network fees, strengthening its "sound money" narrative.
    • Supply Sinks: A large and growing portion of ETH is being locked away, reducing the available supply for sale.
      • 43% of all ETH is currently locked in smart contracts (e.g., staking, DeFi).
      • The amount of ETH held on centralized exchanges is at an 8-year low.
  • Valuation Metrics (Is ETH still cheap?):
    • MVRV Z-Score: This metric, which compares market value to the average cost basis of coins, is at 0.8. The historical average is 1.0. This suggests that ETH is not yet in "overheated" territory (which is typically above 2.0 or 3.0) and may still be in a fair value zone.
    • 200-Week Moving Average: The price of ETH is still relatively close to its 200-week moving average (around $2,500). In past bull markets, the price has detached significantly above this long-term trend line, which has not happened yet in this cycle.
    • Market Cap vs. TVL: The discussion highlighted that ETH's market cap tends to fall to its total value locked (TVL) during bear markets. A "bull market math" scenario was presented: if Ethereum's TVL grows to $1 trillion (driven by stablecoins and RWAs) and it trades at a historical bull market multiple, it could imply a much higher price for ETH.

Takeaways

  • The discussion presents a strong bullish case for ETH, driven by a confluence of institutional adoption, strengthening on-chain fundamentals, and favorable supply dynamics.
  • The relative strength of ETH against BTC could signal the early stages of an "ETH season" where capital rotates into Ethereum and its ecosystem.
  • Key catalysts to watch are the passage of the "Genius Act" for stablecoins and continued inflows into ETH ETFs.
  • Despite a recent price run-up, several long-term valuation metrics (MVRV Z-score, 200-week MA) suggest that ETH may not be overvalued from a historical perspective and could have significant upside potential in this cycle.
  • The "bear case" of lower fee revenue due to Layer 2s was acknowledged, but the speakers framed it as a bullish long-term strategy of prioritizing user growth and network effects, which could lead to greater value accrual later.

Bitcoin (BTC)

  • Context: Bitcoin was primarily discussed as a benchmark for Ethereum's performance and market position.
  • Relative Performance: A key theme was that ETH is beginning to show strength relative to BTC, with instances of ETH rising while BTC falls. The hosts are watching for a sustained rotation of capital from BTC to ETH.
  • Store of Value Narrative: Bitcoin is recognized as the established store-of-value asset, a status that took over a decade to achieve, cemented by figures like Michael Saylor. The speakers suggest ETH is now attempting to "cross the chasm" to gain similar recognition.
  • Key Differences with ETH:
    • Yield: Bitcoin does not have a native yield, whereas ETH offers staking rewards. This could become a compelling reason for investors to rotate from BTC to ETH, especially as staked ETF products become available.
    • Issuance: Bitcoin's current inflation rate is around 0.85%, which is noted as being higher than Ethereum's current effective issuance rate.

Takeaways

  • Investors may want to monitor the ETH/BTC ratio for signs of a continued rotation. The discussion suggests that allocating some capital from BTC to ETH could be a strategic play for this cycle.
  • While BTC is the established digital store of value, ETH is presented as a competitor with a potentially stronger narrative this cycle due to its yield, lower net issuance, and growing utility through stablecoins and RWAs.

Bitwise Ethereum Strategy ETF (BMNR)

  • Context: This publicly traded company was highlighted as "Tom Lee's ETH Treasury company," essentially a vehicle for investors to get exposure to a corporate treasury that holds ETH.
  • Institutional Endorsement: It was revealed that famed investor Peter Thiel recently purchased a 9.1% stake in the company.

Takeaways

  • BMNR is a publicly traded stock that offers indirect exposure to ETH.
  • The investment by a high-profile figure like Peter Thiel is a significant institutional validation of both the company's strategy and ETH as a treasury asset. This could attract more traditional investors.

BitDigital (BTBT)

  • Context: BTBT is a publicly traded company that was formerly a Bitcoin miner.
  • Strategic Pivot to ETH: The company made a major strategic shift by selling its Bitcoin, raising $132 million, and going "all in on Ethereum."
  • Major ETH Holder: BitDigital now holds over 100,000 ETH, making it one of the largest public holders of ETH.

Takeaways

  • BTBT is another publicly traded stock that represents a pure-play bet on ETH.
  • The company's pivot from BTC to ETH is a powerful example of the "rotation" narrative playing out at a corporate level and serves as a strong bullish signal for Ethereum from a former Bitcoin-focused company.

Investment Theme: Stablecoins

  • Context: Described by prominent analyst Tom Lee as "crypto's ChatGPT moment," stablecoins are seen as the key application for onboarding institutions and mainstream users.
  • Major Catalyst: The potential passage of the "Genius Act" in the U.S. is viewed as an imminent and powerful catalyst that would provide regulatory clarity and encourage widespread adoption by banks and fintech companies.
  • Ethereum's Dominance: The Ethereum ecosystem is the primary hub for stablecoins, hosting approximately 55% of the total supply.

Takeaways

  • The growth of stablecoins is a direct tailwind for ETH, as they drive transaction demand and require ETH for gas fees on the network.
  • Investors should watch for news regarding the "Genius Act", as its passage could trigger a new wave of institutional activity and stablecoin issuance on Ethereum.
  • The involvement of major players like JP Morgan, BlackRock, and PayPal validates the long-term potential of stablecoins on public blockchains like Ethereum.

Investment Theme: Real-World Assets (RWAs)

  • Context: RWAs refer to the tokenization of traditional assets like stocks, bonds, and real estate on the blockchain. This is seen as a major institutional growth vector for Ethereum.
  • Growth Trajectory: The sector is experiencing "hockey stick like growth," with assets on Ethereum up 205% year-over-year.
  • Future Potential: While the current market size is $7.5 billion, the speakers emphasized that this is a "drop in the ocean" compared to the hundreds of trillions in traditional financial markets.

Takeaways

  • The RWA theme represents a massive, long-term growth opportunity for the Ethereum network.
  • As more RWAs are brought on-chain, they can be used as collateral in DeFi, creating a reflexive cycle that increases network activity, drives demand for ETH, and enhances the "burn" mechanism.
  • This is an early-stage trend, but its development is a key fundamental factor to monitor for the long-term health and valuation of the Ethereum ecosystem.
Episode Description
Ethereum is gaining steam, but is the real rally just getting started? Mike Nadeau of the DeFi Report joins us to break down Ethereum’s Q2 fundamentals and the 10 most bullish charts from his latest report. We explore why institutional demand may be driving this rally, how ETF flows and treasury holdings are accelerating, and whether ETH remains undervalued despite recent gains. Plus, we dig into the Genius Bill, stablecoin growth, real-world assets, and key onchain metrics that could fuel the next leg of Ethereum’s bull run. Michael Nadeau & The DeFi Report: https://x.com/JustDeauIt https://thedefireport.io https://dune.com/the_defi_report/the-eth-report ------ 📣BIT DIGITAL ($BTBT) | ETH-FIRST PUBLIC COMPANY http://bit-digital.com ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🟠BINANCE | THE WORLDS #1 CRYPTO EXCHANGE https://bankless.cc/binance 🦎COINGECKO API | REAL-TIME CRYPTO PRICE & MARKET DATA https://bankless.cc/coingecko ------ TIMESTAMPS 0:00 Intro 2:29 Peter Thiel buying a 9.1% stake in Tom Lee’s ETH treasury company 4:03 Stablecoin institutional adoption 9:35 Active loans on ETH & L2s 11:49 Real world assets onchain 17:01 ETH in ETFs, net flows & ETH in treasury 24:22 ETH in smart contracts & balance on CEXs 27:36 MVRV/Fair Value & 200-week moving average 32:55 Market Cap vs. TVL & bull market math 35:32 ETH L2 & Yield Bear vs. Bull case 40:11 Closing & Disclaimers ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠
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