The bull run in the crypto market can last for another 1-2 years.

Recently, many KOLs hold a pessimistic attitude towards the crypto market, mainly for two reasons: first, the increasing risk of economic recession in the United States will lead to a shrink in global demand; second, inflation resilience may constrain the policy space of The Federal Reserve (FED), resulting in interest rate cuts falling short of expectations. Although these concerns are not without reason, our view is exactly the opposite: Bitcoin is the “underdog” of this cycle.

First, under the policy combination of “manufacturing reshoring + high tariffs”, the US dollar inevitably enters a depreciation cycle, which will lead to a significant increase in the demand for safe-haven assets such as gold and Bitcoin. Due to the strong pricing power of US capital over Bitcoin, they are more willing to promote Bitcoin to replace gold as the new king of safe-haven assets. (As previously analyzed, no need to elaborate further)

Secondly, the prosperity of the crypto market objectively provides a strategic buffer for the dollar system. The American debt proposal put forward by Miran, the chief economist of the Trump team—imposing a “seigniorage tax” on dollar users and mandating the purchase of ultra-long-term U.S. Treasury bonds—has been difficult to implement in the traditional financial system but has been perfectly realized in the crypto market. Stablecoins like USDT and USDC are essentially equivalent to zero-interest dollar bonds, where investors forgo interest income in exchange for liquidity and market access (on-chain dollars), which is essentially equivalent to charging global dollar users a “usage fee.” As long as U.S. regulators force stablecoin issuers to hold U.S. Treasury bonds as reserve assets, the growth of stablecoins will become a “perpetual motion machine” for increasing demand for U.S. Treasury bonds.

On April 2, the U.S. House of Representatives passed the U.S. Dollar Payment Stablecoin Act, which clearly stipulates that the reserve assets of stablecoins are limited to highly liquid assets such as cash, short-term U.S. Treasury bonds and U.S. bond-based repurchase agreements, and the use of reserves for lending, investment or other purposes is strictly prohibited. This regulation will force issuers such as Tether and Circle to standardize the reserve structure to 0.8 US bonds + 0.2 cash allocation ratio (although there is no hard and fast requirement for the ratio, it is the choice to maximize returns). In other words, for every $1 new stablecoin added in the future, the dollar stablecoin issuer must also increase its holdings of $0.8 of U.S. bonds as reserves.

According to the predictions of the Treasury Borrowing Advisory Committee (TBAC), by 2028, the market size of USD stablecoins is expected to reach $2 trillion. If the “US Dollar Stablecoin Bill” is approved by the Senate, the amount of US Treasury bonds held by stablecoin issuers will reach $1.6 trillion, nearly equivalent to the total amount held by China and Japan.

Therefore, in the context of widespread pessimism in the market, Bitcoin may exhibit better-than-expected performance due to its unique monetary attributes and strategic position within the dollar system. Of course, the performance of Bitcoin alone is still insufficient to support the prosperity of the crypto market, which means that leading coins such as ETH, SOL, XRP, and SUI will also supplement the market’s profit-making effect. Even when leading coins achieve significant valuation increases, bottom-tier altcoins will also have opportunities for periodic rebounds.

On May 7, Ethereum successfully completed the Pectra upgrade. In stark contrast to the market performance after the historical upgrade: after the upgrade of The Merge in 2022 (September 15) and Dencun in 2024 (March 13), the price of ETH has been falling, showing a typical “good and light death” trend. However, after the Pectra upgrade, the ETH price continued to climb. What’s even more bizarre is that the change, which is considered the most important efficiency and user experience improvement since the London upgrade (August 5, 2021), has received little attention and discussion. This reflects the fact that the confidence of ETH holders has been exhausted in this avalanche-like decline. Historical experience shows that when market sentiment falls to freezing and major positives are ignored, it is often a sign that a trend reversal is imminent.

In fact, the significance of the Ethereum Pectra upgrade goes far beyond mere technical optimization—it plays a more crucial role in clearing obstacles for the launch of ETH staking ETFs.

First, EIP-7251 raises the single-account staking limit from 32 ETH to 2048 ETH, allowing institutions like BlackRock to manage millions of ETH through a single account, thereby reducing the complexity of multi-node operations. At the same time, EIP-6110 shortens the validator activation time from 12 hours to 13 minutes, which will reduce the time cost that validators spend waiting during the deposit process, enabling validators to complete deposit operations more quickly and start participating in staking.

Secondly, EIP-7002 allows validators to trigger withdrawals through smart contracts without waiting for a queuing mechanism. Previously, ETH staked by ETFs had to wait 57 days to enter and 28 days to exit the queue, while after the upgrade, the withdrawal process can be shortened to a few hours, effectively avoiding forced discounted sales of ETFs during market volatility. At the same time, staking rewards will be automatically reinvested through contracts, raising the annualized return rate of ETH ETFs to 4%-5%, further enhancing the incentive for institutional allocation.

In simple terms, after the Pectra upgrade, the confirmation time for ETH ETF staking rewards will be reduced from a minimum of 12 hours (excluding queue time) to 13 minutes, and the settlement cycle will also be shortened from at least T+28 days to as fast as T+2 days (U.S. stock market ETFs typically operate on T+2 to T+7 days), and the rewards can also be automatically restaked. Overall, after the Pectra upgrade, the likelihood of approval for ETH staking ETFs and their appeal to institutions will significantly increase. In a sense, the Pectra upgrade is ETH’s “Davis Double Whammy.”