NFTs
ETH NFTs in Banana Zone
Last month, co-founder and CEO of Real Vision Raoul Pal said crypto appeared to be on the brink of banana zonewhere majors and altcoins rally strongly as new all-time highs (ATHs) are reached.
This, ahem, banana zone perspective came into even more focus this week when the price of ETH rose to +$3,700 on news that the U.S. Securities and Exchange Commission (SEC) appears prepared to approve its first ETH ETFs.
With ETH now within 24% of its previous record high of $4,878, and having yesterday seen inflows of $75 billion on ETF excitement alone, it is not a stretch to assume that an official ETF approval in the coming days could boost ETH through its previous ATH and into price discovery mode.
Why? As DCinvestor recently pointedA supply-side crisis appears to be brewing around ETH.
Imagine the buying pressure from large inflows on Wall Street, which could be considerable, to say the least.
So imagine the pushback as Ethereum only issues about 2,500 ETH per day currently, and sometimes that issuance can be completely compensated for burning feesand how there is a ton of ETH essentially locked up in stakes and across various applications and Layer 2s (L2s) right now.
by X
These factors create a perfect storm for a dramatic supply shock. As more institutional investors and retail buyers rush to gain exposure to ETH, the limited supply in circulation will apparently struggle to meet this demand. This dynamic could propel ETH into uncharted territory, pushing prices well beyond previous ATHs.
For those of us who accumulate ETH, this would be great – bringing the banana zone squared. But what else should we look for?
In turn, the king of bananas himself, Raoul Pal, thinks that the next NFT bull run will accelerate once ETH breaches its previous ATH.
Personally, I agree, as we have seen this happen before. When ETH rallied strongly in 2021, people also rallied strongly around things you could do with your ETH, like NFTs.
That said, if ETH really takes off in the coming weeks, then it’s not out of the question that the floor prices of, say, major ETH NFT collections like CryptoPunks, Bored Apes, Pudgy Penguins, and Miladies will double or surpass by the end summer’s. You would also undoubtedly see a resurgence of NFT applications like NFTfi platforms if this were to happen.
Of course, I thought Runas would catalyze the Ordinals ecosystemand while there are certainly synergies still to come here, this catalysis has not yet come to fruition.
And certainly, I think it’s always good to anticipate the unexpected. Perhaps the arrival of ETH ETFs will not be a major catalyst for the ETH NFT scene. However, the arrival of Runes and the arrival of ETH ETFs are very different beasts.
Runas hasn’t ushered in the next leg in the crypto bull market, but ETH ETFs appear poised to do just that. And ETH’s potential supply-side crisis has no analogue to Runas.
If the price of ETH reaches new heights, holders will feel more risky, and a non-trivial number of them will bid on NFTs they were eyeing in the past bear market. Additionally, NFT projects of all types have a better user experience than they did a few years ago, so the ecosystem is more fertile now.
Another angle to consider is that new bullish momentum in ETH and ETH NFTs would likely spur a new wave of innovation and experimentation within the NFT space, from crosschain experiences to gaming and more.
In short, then? We may be on the cusp of the next period of transformation in crypto, where NFTs and their use cases emerge again. Stay tuned and prepare yourself, because things could get crazy soon…