Ethereum ETH Investment Logic (2025)

Background: Ethereum ETH may迎来 its own highlight moment in 2025.

Is Ethereum worth investing in? If this question were raised in 2024, it would be an extremely challenging topic. And now in 2025, under various factors such as the Federal Reserve’s interest rate cuts in the second half of the year, the Trump administration’s deregulation and crypto-friendly policies, and Wall Street KOLs promoting it, Ethereum has resolved the long-standing predicament of not being recognized by the traditional world as a killer application, becoming the hot topic in the crypto and digital asset space known as “LABUBU,” and is now a subject everyone is eager to understand.

In this article, Pan Du, after “Pan Du Insight: The Ultimate Vision Investment Logic of Bitcoin,” continues to share the company’s investment logic for Ethereum in 2025 (Part Three) and its medium to long-term investment reasoning, allowing investors to be more at ease and better judge how or whether to invest in Ethereum.

Image: Coinbase CEO posts a comparison of the investment returns of various asset classes, with Ethereum and Bitcoin significantly leading the S&P 500 and gold (past performance does not guarantee future results, content as of the evening of August 14, 2025)

1. The Origin and Mechanism of Ethereum

The white paper of Ethereum (note) was originally published in 2013 by Vitalik Buterin, who lived in Canada, and officially launched in 2015. It is said that Ethereum founder Vitalik Buterin was obsessed with World of Warcraft in his youth, and when Blizzard Entertainment updated the game, it removed the core skills of his character. Buterin repeatedly emailed to protest but to no avail, realizing the hegemony of centralized systems (developers can change the rules at will, and players are powerless). This prompted him to give up the game and turn his attention to decentralized technology, inspiring his later idea of creating Ethereum.

1. Ethereum is more about “use”, making up for Bitcoin’s shortcomings.

The Ether we often hear about is the native cryptocurrency in the Ethereum blockchain network. The birth of Ethereum was mainly to provide programmers with a more convenient programming environment, allowing for more flexible development of various blockchain-based applications through smart contracts and other means.

The operation mechanism of Ethereum is significantly different from that of Bitcoin, and its original intention was to address the shortcomings of Bitcoin in terms of scalability. The birth of Ether aims to support the development and use of applications based on blockchain technology. For example, the non-fungible tokens (NFTs) that have gained widespread attention in recent years are an application on Ethereum. In addition, there are similar applications such as decentralized finance (DeFi) and decentralized applications (DApps). (Please refer to the attached page)

It is important to note that on the Ethereum network, all activities related to application development and operation require the consumption of Ether. The emphasis here is on “consumption” rather than “use”, meaning that once Ether is used, it no longer exists. Investors can also choose to hold Ether as an asset, anticipating its value to appreciate. This unique attribute distinguishes Ether from traditional currencies, making it more like a consumable resource, similar to oil in an industrial society: oil can be stockpiled and traded, but its primary function is to be consumed as energy to drive production.

2. Ether is digital oil, and the supply growth rate is not high.

It is said that Bitcoin is like gold, while Ether is like oil, and there is a very important reason for this, which lies in the supply of both. The supply of Bitcoin is similar to that of gold; it is limited, with a total of 21 million coins. In contrast, there is no upper limit on the total amount of Ether; new Ethers are generated every year, which is somewhat similar to oil extraction. However, the rate of Ether issuance is actually not fast. From the beginning of Ether’s design, the system was set up to keep the annual issuance roughly equal to the amount lost, so in the long run, the growth of Ether’s money supply approaches zero.

2. Underlying Investment Logic: The Biggest Beneficiary of Blockchain Development

Ether is essentially a consumable, just like oil. Normally, you wouldn’t see people treating oil as a trading commodity, making money off of buying and selling. If you really buy oil, what you hope to see is the real development of the world’s economy, with more and more people truly using oil, then the price of oil will naturally rise, and only then can you really make money.

Source: Bloomberg Finance, organized by Pando, from 2018 to August 14, 2025

The more people use it, the higher the value: Similarly, if you invest in Ether, what you should focus on is not its value storage capability, but its practical value. You hope to see more and more people using Ethereum to develop applications or actually use applications on Ethereum, then the value of Ether will truly increase. Conversely, if it is detached from real application scenarios, then the value of Ether will be significantly discounted.

Proven high stability: Over the years, Ethereum has faced various challenges such as hacking attacks and forks, yet it remains secure and reliable, which solidifies its security and trust foundation. Among all blockchains, the recognition of Ethereum’s certification mechanism is the highest. If you want to develop new blockchain applications, you can fully rely on Ethereum, which has a large trust foundation and certification facilities.

In summary, Ether is more like a tool that continuously creates value. The more value it creates, the more valuable it becomes. Its way of creating value is by continuously developing new applications and allowing more people to participate. From this perspective, as long as the entire blockchain industry continues to develop, Ethereum will be the biggest beneficiary, without exception. And Ether is the best investment medium for us to layout the entire blockchain development.

3. 2025 is the Chat GPT moment for Ethereum

This year, we review the market dynamics, with Ethereum standing out particularly. Pan Du believes that although Ethereum has experienced a rapid rise in the short term, this is largely due to the combination of short-term policies and grand narratives driving the long-term investment logic. These include its own Pectra upgrades and the expansion of Layer 2 solutions, which are somewhat related. More importantly, as mentioned above, Ethereum is often hailed as “digital oil,” and its value proposition is based on the increasingly growing practicality—stablecoins and Wall Street’s narrative of bringing traditional assets on-chain have placed Ethereum investments on the table for traditional investors. Moreover, investment banks predict a compound growth rate of 70% for stablecoins over the next three years, making such investment opportunities irresistible. Wall Street’s Fundstrat Chief Investment Officer Tom Lee referred to stablecoins as Ethereum’s Chat GPT moment, signifying that it has finally arrived at its own shining moment.

The global macroeconomic environment has provided important conditions for this bullish narrative. In 2025, global central banks adopted loose monetary policies, and interest rate cuts diminished the appeal of high-risk assets, guiding investors towards high-risk opportunities such as cryptocurrencies or stocks of small to mid-cap listed companies. As of now (August 15, 2025), the U.S. Federal Reserve is expected to start cutting interest rates in September, influenced by pressure from the Trump administration and weak employment data, with market rumors suggesting that there could be one to two more rate cuts before December.

The passage of the GENIUS Act stablecoin bill is a significant catalyst that greatly promotes the anticipated growth in the issuance of stablecoins in the future. Most stablecoins today, such as USDC, are based on the ERC-20 standard, making Ethereum their natural primary platform. This has led to an increase in trading volume, a rise in total value locked (TVL), and a corresponding growth in potential future ETH demand. Furthermore, stablecoins bridge traditional finance and blockchain, with RWA tokenization requiring stablecoins for pricing and settlement. This fusion of traditional and decentralized finance highlights the continuous growth of the Ethereum ecosystem.

Source: Pandu Finance, August 2025

Institutional entry has become a turning point for the price of Ether. Over the past two years, the dominance of cryptocurrency investment has shifted from retail investors to professional investors, and Wall Street’s enthusiasm is evident, with over $50 billion flowing into Ethereum ETFs, reflecting high confidence from institutions. Companies like BitMine and SharpLink, acting as treasury for Ethereum, further solidify this trend (for details, please refer to “Pandao Watchlist: Analysis of Ethereum ETH Treasury Companies”).

As mentioned above, Ethereum’s mature ecosystem has not experienced any significant incidents over the years, earning the high trust of institutions (retail investors may prefer Solana), making it the preferred choice for this large-scale capital deployment. Furthermore, the supply dynamics further support the bullish case. A large amount of ETH is locked in smart contracts, reducing the circulating supply and creating a scarcity effect. Compared to Bitcoin, Ethereum’s smaller market cap means that the same capital inflow has a more significant impact on its price. Notably, Ethereum does not face the selling pressure from ancient Bitcoin whales or government disposals—contrasting sharply with Bitcoin—enhancing its stability.

Analysts are paying close attention to this. Standard Chartered has raised its year-end price target to $7,500, reflecting an optimistic outlook on Ethereum’s fundamentals. Noted market strategist Tom Lee called it the biggest macro trade for the next ten to fifteen years, predicting a year-end price range of $12,000 to $15,000. Cathie Wood, known as “Wood姐”, has increased her positions in Ethereum-related assets like BitMine, emphasizing its status as an institutional-grade protocol. These predictions indicate a strong consensus in the market regarding Ethereum’s growth potential.

Source: Pandu Finance, August 2025

4. Investment Risks of Ethereum

Ethereum, as a risk asset, is still one of the external prerequisites for its price to continue rising, due to the Federal Reserve’s monetary policy and ample liquidity. On the other hand, Ethereum’s own advantage lies in providing a high-quality application development environment for developers, and this quality foundation is based on its technological advantages. However, technology is something that is susceptible to challenges. In fact, many new blockchain platforms have already emerged, all claiming to offer developers more efficient and cheaper blockchain technology. This is the main risk for Ethereum.

5. Summary

Overall, the convergence of loose monetary policy, the surge of stablecoins, institutional adoption, and technological advancements has brought strong bullish prospects for Ethereum. Many investment banks believe that its price target of over $10,000 is imminent. Investors should seriously consider whether Ethereum’s compelling narrative should be the sole criterion for their portfolios, while continuously monitoring monetary policy, the implementation of stablecoins, and on-chain asset performance. Pandu will also continue to cover Ethereum-related situations for investors.