Why Do On-Chain Markets Choose ETH as the Foundation: Market Structure Analysis from a Perspective

As investors seek a deeper understanding of recent cryptocurrency market volatility, an important question arises: do the current price swings truly reflect a weakening of the underlying technology, or are they merely temporary market mechanism fluctuations? Jack Yi, founder of LD Capital—a well-known investment fund in the blockchain space—recently shared a compelling perspective on social media platform X. He believes that Ethereum remains resilient with its core strengths, despite the short-term fluctuations the market is experiencing.

Changing Market Structure: From Spot Liquidity to Derivative Dominance

To understand Yi's viewpoint, we need to look at the nature of the changes occurring within the Ethereum ecosystem. Since the significant volatility events in October, the spot market has seen a substantial decline in liquidity. However, this does not mean the system is weakening—instead, it is undergoing a meaningful transformation.

Currently, derivative tools are becoming the primary force influencing how markets price assets. This shift reflects the maturation of the market—from retail participants to institutions employing more complex strategies. This is not a sign of decline but evidence of the growth of on-chain financial infrastructure.

ETH is currently trading at $3.31K with a 24-hour volatility of -1.43%, while daily trading volume reaches $476.66M. These indicators show that despite downward pressure, the broader trend is still ongoing.

Historical Cycles and Seasonal Models: A Framework to Understand the Present

Yi is not an analyst who only looks at what is happening now. He references historical models to explain why current fluctuations are within predictable ranges.

The cryptocurrency market moves in roughly four-year cycles, often heavily influenced by Bitcoin halving events and market sentiment related to holiday seasons. Being aware of where we are in this cycle is key to avoiding surprises from seemingly “abnormal” volatility.

Calculations show that certain times of the year tend to generate greater instability. For experienced investors, these periods are opportunities to implement strategic accumulation strategies.

Difficulties in Identifying Market Bottoms—and Why That’s Not a Problem

Yi candidly admits that pinpointing the exact bottom of any market is nearly impossible, even for top analysts. But he does not see this as an obstacle to taking action.

Instead, he proposes a different approach: viewing the current phase as an opportunity to build positions for those with medium- to long-term visions. Cryptocurrency market history shows that patient accumulation during turbulent times often yields significant rewards when the cycle turns.

This approach requires three key awarenesses:

1. Position in the cycle: Understanding where we are on the long-term growth curve
2. Market drivers: Recognizing how derivative tools are influencing price discovery
3. Fundamental value: Maintaining focus on the technological advantages Ethereum possesses

Ethereum: An On-Chain Financial Bridge Asset

From a long-term portfolio construction perspective, Yi sees Ethereum not just as a typical cryptocurrency. It is the central asset of the on-chain financial revolution—a platform on which decentralized applications, DeFi protocols, and entirely new economic models are being built.

This distinction is crucial. While most investors only look at daily price fluctuations, they miss the fact that the Ethereum ecosystem continues to grow strongly. Continuous technological updates, increased developer activity, and expanding real-world applications—these are fundamental factors that continue to reinforce its position.

Additionally, Yi emphasizes the role of other projects like World Liberty Financial (WLFI) within a diversified investment strategy. These choices reflect a broad approach across the blockchain ecosystem, with Ethereum remaining the primary foundation.

From Theory to Action: Lessons for Current Investors

Investors—whether individuals or institutions—monitoring the cryptocurrency market should draw specific lessons from such analyses:

First, recognize that structural evolution is normal. As derivative tools increasingly influence price discovery, this signals market maturity, not decline. This growth introduces new complexities but also facilitates more stable long-term valuation mechanisms.

Second, distinguish between signals and noise. Short-term price fluctuations often obscure ongoing fundamental developments. Ethereum upgrades, ecosystem growth, and increased network activity continue regardless of daily price swings.

Third, think long-term about investment horizons. If you can look beyond short-term volatility, the current market conditions may present attractive entry points for accumulation strategies.

What is LD Capital—and Why Is Its Perspective Important

LD Capital is a blockchain-focused investment fund known for deep market analysis and data-driven investment strategies. Founder Jack Yi has built a reputation for providing insights that are not only optimistic but also supported by structured thinking and analysis.

For the investor community, perspectives from firms like LD Capital are valuable because they attempt to differentiate between temporary volatility and sustainable structural advantages.

Frequently Asked Questions About This Analysis

What does Jack Yi mean by “fundamental” of Ethereum?

He refers to Ethereum’s core technological strengths—including its network infrastructure, active developer community, on-chain financial utility, and long-term benefits. These factors exist independently of short-term price movements.

Why does the presence of derivatives matter?

When derivatives dominate price discovery, it indicates increasing institutional participation and market sophistication. While this creates new dynamics, it also tends to lead to more sustainable long-term valuation mechanisms.

How can one capitalize on the current market conditions?

Yi suggests viewing the current situation as an opportunity to build positions for those with medium- or long-term visions. This requires patience and an understanding of historical market cycles.

What role do four-year cycles play?

Historical data shows that cryptocurrency markets tend to move in roughly four-year cycles, often driven by Bitcoin halving events. Recognizing where we are in this cycle helps investors contextualize volatility.

Can data-driven strategies be reliable during volatile periods?

While short-term volatility can challenge any strategy, approaches based on fundamental analysis and data tend to perform better over longer time horizons.