Written by Fernando Pertini
Compiled by Saoirse, Foresight News
Wall Street has already begun building on the Ethereum ecosystem, but the vast majority of portfolios still hold zero positions.
André Kostolany made a market observation I deeply admire: “In the stock market, 2 plus 2 never equals 4—it equals 5 minus 1. All you need is the inner strength to accept that ‘minus 1.’”
Ethereum investors are very familiar with this "minus one."
After five years of consolidation and volatility, hopes were repeatedly dashed, and claims that “Ethereum is dead” never ceased. One after another, new blockchains emerged, claiming to replace Ethereum. With wild market fluctuations, even long-term investors couldn’t help but question their original choices.
This summer, the tide turned. I’m not referring to another wave of emotional fervor in the crypto community, but rather to traditional financial institutions finally launching Ethereum-based services.
Robinhood launches an Ethereum Layer 2 network. Within just six weeks, total value locked exceeds $1 billion. Revolut, with over 80 million users, issues a euro stablecoin on Ethereum.
Two tokenized money market funds under J.P. Morgan Asset Management have reached a combined size of over $800 million on the Ethereum mainnet. Crédit Agricole has issued a euro-stablecoin on Ethereum and used it to settle the subscription of a tokenized money market fund from AXA. Japan has launched its first trust-based yen-stablecoin built on Ethereum. Neuberger Berman has also launched its first tokenized fixed-income fund on Ethereum.
Subsequently, BlackRock officially entered the space—not by releasing a podcast episode or offering a superficial remark like “blockchain has great potential,” but by launching tangible products. BlackRock launched several tokenized Ethereum funds, followed by an announcement that it would partner with JPMorgan’s Kinexys to tokenize a portion of its European Institutional Cash Series (with assets under management of $311 billion as of June 30) on the Ethereum blockchain.
Morgan Stanley has launched an Ethereum product with staking functionality. Fidelity has submitted an application to add staking features to its Ethereum ETF. Open USD confirmed it was deployed on Ethereum from launch, with over 140 ecosystem participants.
When a series of events occur in succession, it is no longer coincidence, but a well-established financial structure.
Vlad Tenev calls it the global tokenization supercycle. Tom Lee goes even further: “The term ‘tokenization supercycle’ may even underestimate the coming transformation.” I think he has a point.
Tokenization is merely the visible first layer of change. Behind it lie stablecoins, programmable collateral, 24/7 trading markets, and instant settlement. Looking ahead, AI agents will autonomously buy, sell, negotiate, and make payments to one another. No longer bound by banking hours or T+1 settlement cycles, phrases like “wire transfer expected to arrive tomorrow” will likely disappear, and manual intervention to trace fund transfers will no longer be necessary.
Does that sound familiar?
The first wave of AI-driven markets centered around computing power. The next wave may require a currency natively rooted in software systems.
Bitcoin showed Wall Street the value of digital scarcity; Ethereum will show Wall Street the value of programmable capital.
This point is particularly intriguing.
On July 1, the price of Ethereum was approximately $1,560, rising to about $2,450 by the end of August, marking a significant increase. The scale of business initiatives by major institutions around Ethereum has continued to expand, with increasingly sophisticated products and real-world applications moving beyond theoretical models. However, traditional institutions still hold very little Ethereum in actual possession.
For many years, not allocating any portion of a portfolio to Ethereum was the safest career choice in the financial industry. No one would be fired for missing out on Ethereum. Fund managers didn’t need to explain to the investment committee why their portfolio didn’t include Ethereum.
But things are different when BlackRock, JPMorgan, Robinhood, Revolut, Fidelity, Morgan Stanley, Crédit Agricole, and Neuberger Berman all enter the Ethereum space.
One day, the investment committee’s questions will be completely reversed: from “Why are we allocating to Ethereum?” to “Wait, can you tell me again why we’re not allocating at all?”
This is the short squeeze I truly care about—unrelated to publicly disclosed short positions, unrelated to perpetual contracts, and not about those trading at 50x leverage at 3 a.m.
The largest short position on Ethereum may be the trillions of dollars in investment portfolios that still hold zero ETH.
Stop and reread this sentence, and think about it carefully.
If you actively short Ethereum, you’re clearly bearish on it. But if you manage a traditional investment portfolio and choose zero exposure to Ethereum, while the financial system increasingly builds atop Ethereum, you’ll eventually realize: zero exposure is itself a position. This is precisely what makes the whole situation most thought-provoking.
The sentiment in Washington is also shifting. The focus of industry discussions has moved from “Should cryptocurrencies be included in the financial system?” to “Alright, so how do we actually integrate them?”
The CLARITY Act remains unresolved and is likely to be delayed again. Almost everyone expects this.
But if the bill makes genuine bipartisan progress—something that has happened multiple times in U.S. history—the situation would be drastically different. Another failure of the bill would cause little impact; however, a substantive breakthrough would force institutions to rapidly reassess their timelines and adjust their positions.
My core logic does not depend on the CLARITY Act being enacted; its passage would only accelerate the entire process.
Kostolany also mentioned a lesson investors often forget: markets rarely realize gains in a straight line according to a single logic. First comes the idea, then a long wait, often accompanied by pain, and much later, everyone comes forward to explain why the outcome was inevitable.
I anticipated that Ethereum will experience multiple "minus one" corrections in the future.
But look at today: Wall Street is no longer debating whether this underlying infrastructure deserves attention—it’s actively building businesses on top of it. Asset allocators are still watching, hesitating about whether to enter. Yet the reality remains: the vast majority of investment portfolios still hold zero Ethereum.