The Hilariousness of Ethereum's $2.2k Price and China's Changing Role in the Global Economy

The Hilariousness of Ethereum's $2.2k Price and China's Changing Role in the Global Economy

Introduction:

In the world of cryptocurrency, Ethereum has been making waves with its price at $2.2k. While some traders are caught up in speculation, it's important to recognize the fundamentals that Ethereum brings to the table. In this article, we will delve into the reasons why the current price of $2.2k for Ethereum is undervalued and explore the changing role of China in the global economy.

The Fundamentals of Ethereum:

Ethereum has proven itself to be a profitable chain, generating $2.7 billion in annualized profits. With a P/E ratio of 98, it surpasses even Amazon's P/E ratio of 75. Additionally, Ethereum has witnessed the rise of Layer 2 chains, which are net new buyers of blockspace. In fact, five Layer 2 chains were among the top 10 consumers of Ethereum blockspace last week. This highlights the growing importance of Ethereum as a platform.

Deflationary Nature:

Unlike the previous cycle, where Ethereum experienced inflation of 3-4% per year, this cycle is witnessing a deflationary trend. Ethereum is projected to burn around 0.5% per year, solidifying its position as a deflationary asset. In fact, if Ethereum had the same monetary amplifier as gold, its value would already be worth $22k. This shift in the economic landscape further establishes Ethereum as a monetary instrument, akin to digital gold.

Real Returns for Bond Holders:

One key aspect that sets Ethereum apart from other chains is its bond holders, known as validators, who earn a substantial 5.3% per year. Unlike nominal returns, these returns are considered "real returns." Ethereum can be seen as the internet bond, offering investors an opportunity for consistent earnings. This aspect adds another layer of attractiveness to Ethereum as an investment opportunity.

Potential for ETF and ESG Investments:

Ethereum's growing prominence has positioned it as a potential candidate for a spot ETF (Exchange-Traded Fund). If Ethereum achieves this status, it will join Bitcoin as the only cryptocurrencies to have such recognition, opening the doors to trillions in locked capital inflows. Additionally, with Ethereum fully transitioning to proof of stake, it no longer burns excessive energy to produce blockspace. This feature aligns well with the environmental, social, and governance (ESG) criteria that many investors prioritize. As a result, the ETF Ethereum is likely to be the only one that meets these requirements, attracting a new wave of ESG-focused investors.

China's Changing Role in the Global Economy:

Shifting our focus to the global economic landscape, it's interesting to note the changing role of China. In the aftermath of the 2008 financial crisis, China played a significant role in aiding the recovery of the US economy. By purchasing US treasuries, they provided much-needed support. However, the current scenario presents a complete reversal. China's holdings of US treasuries are at their lowest level since 2009, indicating a shift in their investment strategy.

Conclusion:

In conclusion, Ethereum's current price of $2.2k fails to reflect its true value based on its fundamentals and potential. With its profitability, deflationary nature, and potential for an ETF, Ethereum presents a compelling investment opportunity. Moreover, the changing role of China in the global economy highlights the evolving dynamics of international finance. As the market continues to behave irrationally, it's crucial for investors to recognize the underlying factors driving these developments.

Actionable Advice:

• 1. Consider diversifying your investment portfolio to include Ethereum: With its strong fundamentals and potential for growth, Ethereum presents an attractive investment opportunity.

• 2. Stay informed about the changing role of China: As China's investment strategies shift, it's important to stay updated on their impact on the global economy and adjust your investment decisions accordingly.

• 3. Keep an eye on the ETF market: If Ethereum achieves the status of an ETF, it could lead to significant capital inflows. Monitoring this development can help you make informed investment choices.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Always conduct thorough research and consult with a professional financial advisor before making any investment decisions.