The Blind Spot of Ethereum Surpassing 5 Million
Fee-free campaigns by domestic exchanges are inducing a massive influx of retail investors, forming a structure that is pushing ETH prices towards the 5 million yen mark. This carries the risk of repeating the "retail entry → overheating → sharp decline" pattern seen in the 2017 and 2021 bubbles, making it crucial to discern this underlying structure now.
── Understand in 3 points ─────────
- • Predictions that Ethereum (ETH) price will reach the 5 million yen range (around $33,000) per ETH by early 2026 are trending on X.
- • Major domestic crypto asset exchanges have launched fee-free campaigns for ETH spot trading, leading to a surge in new retail investor accounts.
- • Since the approval of Ethereum ETFs in the US in May 2024, institutional capital inflow has continued, fundamentally changing ETH's supply and demand structure.
── NOW PATTERN ─────────
Fee-free campaigns amplify retail investors' FOMO, creating a "chain of contagion" of price increases → new entries → further price increases. Simultaneously, the entry of institutional investors via ETFs fosters a "moral hazard" structure that seemingly validates the price, thereby contributing to a decrease in risk perception.
── Probability and Response ──────
• Base case 50% — ETH/USD stagnates around $30,000, Bank of Japan (BOJ) policy meeting maintains status quo, gradual announcement of fee-free campaign termination, slowdown in ETF capital inflow
• Bull case 25% — Statement of separate taxation policy in the Tax System Reform Outline (税制改正大綱), BOJ hints at additional easing, USD/JPY breaks 165 yen, ETH ETF options trading begins, surge in Asian trading volume
• Bear case 25% — SEC statements regarding ETH's security classification, security incidents in DeFi protocols, unexpected BOJ interest rate hike, sharp drop in ETH futures funding rates, surge in transfers from large wallets
📡 THE SIGNAL — What Happened
Why it matters: Fee-free campaigns by domestic exchanges are inducing a massive influx of retail investors, forming a structure that is pushing ETH prices towards the 5 million yen mark. This carries the risk of repeating the "retail entry → overheating → sharp decline" pattern seen in the 2017 and 2021 bubbles, making it crucial to discern this underlying structure now.
- Price Trends — Predictions that Ethereum (ETH) price will reach the 5 million yen range (around $33,000) per ETH by early 2026 are trending on X.
- Exchange Policies — Major domestic crypto asset exchanges have launched fee-free campaigns for ETH spot trading, leading to a surge in new retail investor accounts.
- Market Environment — Since the approval of Ethereum ETFs in the US in May 2024, institutional capital inflow has continued, fundamentally changing ETH's supply and demand structure.
- Technological Background — Since The Merge in September 2022, ETH has transitioned to Proof of Stake, significantly reducing new issuance (inflation rate of approximately 0.5% or less annually), and combined with the burn mechanism, it is becoming a deflationary asset.
- Regulatory Environment — The revised Payment Services Act will come into effect in 2025, and discussions on crypto asset tax reform (transition to 20% separate taxation) are underway for the 2026 Tax System Reform Outline (税制改正大綱).
- Macroeconomics — The Bank of Japan's (BOJ) continued monetary easing and the depreciation of the yen (USD/JPY in the 155-160 range) are structural factors pushing up the ETH price in yen.
- Competitor Trends — Despite the rise of competing L1s like Solana and Avalanche, Ethereum still occupies approximately 55% of DeFi TVL (Total Value Locked).
- Retail Investor Trends — Reports indicate that the number of new account openings at domestic crypto asset exchanges increased by approximately 40% year-on-year in January-February 2026.
- Staking — ETH staking balance has reached approximately 28% of the total supply, and the decrease in circulating supply is strengthening upward price pressure.
- L2 Ecosystem — The expansion of transaction volume on L2s (Layer 2) such as Arbitrum, Optimism, and Base is increasing ETH fee revenue and burn volume.
- International Comparison — South Korea's Kimchi premium (a 5-8% premium compared to international prices) has reappeared, indicating rising speculative demand in Asia.
- Derivatives — ETH futures funding rates are trending in positive territory, and an accumulation of leveraged long positions is observed.
To understand the phenomenon of Ethereum approaching the 5 million yen mark, it is necessary to view it through three historical contexts: the cyclical nature of the crypto asset market, the behavioral patterns of Japanese retail investors, and Ethereum's inherent structural changes.
Firstly, the crypto asset market has repeated approximately 4-year cycles, starting with Bitcoin's halving events. The first halving in 2012 led to the 2013 bubble, the second in 2016 to the 2017 bubble, the third in 2020 to the 2021 bubble, and after the fourth halving in April 2024, the period of 2025-2026 is expected to be the peak of the cycle. In the past three cycles, a pattern has been observed where Bitcoin first reaches new all-time highs, followed by an "alt season" where funds rotate into altcoins (especially ETH). The prediction of a sharp ETH rise in early 2026 is based on this cycle theory.
Secondly, Japanese retail investors (the so-called "Mrs. Watanabe") have a clear history of crypto asset entry patterns. During the 2017 bubble, Japan accounted for approximately 40% of global Bitcoin trading volume. At that time, bitFlyer and Coincheck also ran fee-free campaigns and heavily invested in TV commercials, resulting in a surge of retail investors entering the market without fully understanding crypto assets. The subsequent Coincheck hacking incident in January 2018 (approximately 58 billion yen in NEM outflow) and the price crash caused significant losses for many retail investors. A similar pattern was repeated during the 2021 DeFi boom, but the scale of damage was limited due to strengthened regulations by the Financial Services Agency (金融庁) following the lessons of 2018.
Thirdly, it is crucial that Ethereum itself has become a fundamentally different asset since "The Merge" in September 2022 (transition from PoW to PoS). Before the PoS transition, ETH was newly issued at an annual inflation rate of approximately 4.3%, but after the transition, it drastically decreased to approximately 0.5% or less annually. Furthermore, combined with the burn mechanism by EIP-1559 (burning a portion of transaction fees), ETH became a "deflationary asset" where its supply net decreases during periods of high network usage. This supply structure is more scarce than gold, forming a fundamentally different investment thesis from traditional crypto assets.
The approval of Ethereum ETFs in the US in May 2024 was a turning point where institutional investors recognized this structural change. With the world's largest asset management companies like BlackRock and Fidelity beginning to offer ETH ETFs, capital inflow routes from pension funds and family offices have opened. As a result, ETH's price formation is undergoing a structural shift from traditional "speculation on crypto asset exchanges" to "asset allocation through traditional financial markets."
Turning to the Japanese market, the legal positioning of crypto assets will be clarified with the enforcement of the revised Payment Services Act in 2025, and discussions on separate taxation for crypto assets (transition from the current maximum 55% comprehensive taxation to 20% separate taxation) are intensifying towards the 2026 Tax System Reform Outline (税制改正大綱). The pattern of accelerating capital inflow into the domestic crypto asset market whenever expectations for tax reform rise is similar to what happened in the stock market during the new NISA reform in 2023-2024.
The depreciation of the yen is also a significant factor pushing up the ETH price in yen. Even if the ETH price in USD remains flat, a weakening yen will cause the yen-denominated price to rise. The persistence of the interest rate differential between Japan and the US from 2024 to 2026 (BOJ's cautious rate hikes vs. FRB's maintenance of high interest rates) is sustaining the yen's depreciation, which in turn facilitates the realization of headlines like "ETH 5 Million Yen."
In other words, the current ETH 5 million yen prediction is the result of five structural factors acting simultaneously: ① the peak zone of the crypto asset's 4-year cycle, ② ETH's unique deflationary supply structure, ③ institutional investor entry due to ETF approval, ④ expectations for Japanese tax reform, and ⑤ yen depreciation. This gives it a substantive basis different from mere speculative fervor. However, at the same time, the surge in retail investors due to domestic exchanges' fee-free campaigns is also a sign of the "last buyer" pattern seen in past bubble periods, and therein lies the essential tension.
The delta: Domestic exchanges' fee-free campaigns have dramatically lowered the barrier to entry for retail investors into ETH, initiating a self-reinforcing loop of "retail inflow → price increase → further retail inflow" seen in 2017 and 2021. While this pushes prices up in the short term, it signifies an accumulation of bubble collapse risk in the medium term. What's different this time is the presence of institutional investors via ETFs, but they mechanically sell during price declines, which could also accelerate a downturn.
🔍 BETWEEN THE LINES — What the News Isn't Saying
The true purpose of domestic exchanges' fee-free campaigns is not to promote crypto assets but to "build KPIs before IPOs" and "capture market share from competitors." Exchanges are eyeing listings and M&As, and a rapid expansion in account numbers and trading volume directly impacts corporate valuation. In other words, retail investors are being mobilized not as "customers" but as "KPI figures." Furthermore, the "ETH 5 million yen" figure itself is a superficial milestone created by the dual effect of rising dollar-denominated prices and yen depreciation; in dollar terms, it has not yet significantly surpassed the 2021 all-time high. If the yen reverses its depreciation, the yen-denominated price will plummet regardless of ETH's intrinsic value.
NOW PATTERN
Chain of Contagion × Moral Hazard × Winner Takes All
Fee-free campaigns amplify retail investors' FOMO, creating a "chain of contagion" of price increases → new entries → further price increases. Simultaneously, the entry of institutional investors via ETFs fosters a "moral hazard" structure that seemingly validates the price, thereby contributing to a decrease in risk perception.
Intersection of Dynamics
The three dynamics of "Chain of Contagion," "Moral Hazard," and "Winner Takes All" form a dangerous interaction that amplifies each other.
First, Ethereum's "Winner Takes All" structure positions ETH as "the safest option among crypto assets." The fact that it occupies 55% of DeFi TVL and BlackRock offers an ETF creates a sense of security that "ETH will be fine." This sense of security fosters "Moral Hazard," reducing investors' risk perception. Investors with reduced risk perception actively enter the market, boosted by fee-free campaigns, which accelerates the "Chain of Contagion."
When these three dynamics act simultaneously, the market enters its most dangerous state: a "structurally justified speculative bubble." Bubbles always have a certain rational basis—the problem is how far that basis justifies the price. Ethereum's technological superiority and institutional legitimacy are real, but whether they justify a price of 5 million yen is another matter, and the boundary between "real value" and "speculative premium" is always ambiguous.
Historically, at the intersection of these dynamics, upward phases last longer than expected, while reversals are also more intense than expected. Even during the 2021 DeFi Summer, Ethereum's technological value was real, yet the ETH price still fell by approximately 80% from its peak in 2022. The idea that "it won't crash because it has real value" is an illusion spoken in every bubble, and this time may be no exception.
Particular attention should be paid to the high probability that most new investors who entered through fee-free campaigns do not fully understand the mechanisms of leveraged trading or staking. A "reverse contagion" during a price reversal could develop into a crash far exceeding a normal decline, as panic selling by these investors and forced liquidation of leveraged positions occur simultaneously. The interaction of the three dynamics appears as a "virtuous cycle" during an uptrend but reverses into a "vicious cycle" during a downturn. While it is impossible to predict when this turning point will come, understanding the structure is essential.
📚 PATTERN HISTORY
2017-2018: Japan's Crypto Asset Bubble and Collapse
Massive TV commercial campaigns and fee competition by domestic exchanges → Explosive entry of retail investors → Bitcoin surpasses 2 million yen → Coincheck hack → Price plummets 80%.
Structural similarities with the current situation: Creating an environment where "anyone can buy" lowers entry barriers while simultaneously attracting a large number of investors with limited risk understanding. They become the "last buyers," forming the peak of the bubble.
2021: DeFi Summer and NFT Bubble
DeFi yields and NFT frenzy → ETH price breaks $4,800 → Expansion of leveraged positions → 2022 LUNA/FTX collapse → ETH drops approximately 80%.
Structural similarities with the current situation: Even with technologically legitimate value, speculative premiums erode. The entry of institutional investors does not prevent bubbles; rather, it increases selling pressure during a collapse.
2000: Dot-com Bubble
The revolutionary value of the internet was real → Surge in retail investors due to reduced fees by online brokerages → NASDAQ surpasses 5,000 → Collapse → Approximately 78% decline.
Structural similarities with the current situation: In bubbles of revolutionary technology, the value of the technology itself is correct, but prices become excessive. Lowering entry barriers through reduced fees is a typical catalyst for accelerating bubbles.
2024-2025: Bitcoin ETF Approval and Subsequent Surge
BTC ETF approval in January 2024 → Institutional investor inflow → BTC surpasses $100,000 → ETH ETF also approved → Alt season expectations.
Structural similarities with the current situation: ETF approval acts as "institutional endorsement," reducing risk perception. However, ETFs also mechanically sell during downturns, which can amplify volatility.
1989: Japan's Bubble Economy Collapse
Financial liberalization → Retail investor speculation in stocks and real estate → Nikkei Average reaches 38,957 yen → Collapse → Over 30 years of stagnation.
Structural similarities with the current situation: The combination of easier access to financial products and the collective psychology of "this time is different" leads to the same outcome across all eras and asset classes.
Patterns Revealed by History
The patterns revealed by these five historical precedents are strikingly consistent: ① revolutionary technologies or asset classes emerge, ② reduced trading barriers (fee-free, online brokerages, ETFs) enable massive retail investor entry, ③ a "this time is different" justification logic forms (the internet is real, DeFi will change finance, ETFs make it safe), and ④ prices significantly overshoot intrinsic value, at which point some external shock triggers a collapse—this is the cycle.
A crucial lesson is that the "justification logic" of bubbles is always partially correct. The internet did indeed change the world, and DeFi is transforming finance. The problem lies in the logical leap from a correct premise ("Ethereum has value") to an incorrect conclusion ("therefore, the current price is justified"). ETH's technological value and its fair price are separate issues, and many retail investors entering through fee-free campaigns do not understand this distinction.
Another lesson is that truly valuable things survive even after a bubble bursts. Amazon and Google survived the dot-com bubble collapse and grew into giant corporations. Similarly, even if ETH's price temporarily crashes, the Ethereum ecosystem itself is likely to survive. The problem is that "surviving" and "whether the current price is justified" are entirely different questions.
🔮 NEXT SCENARIOS
Ethereum approaches 5 million yen in Q1 2026 but does not clearly break through, instead trading in the 4.5-5 million yen range. Domestic exchanges' fee-free campaigns promote new account openings and increase trading volume, but the 5 million yen ETH price is predicated on further yen depreciation (USD/JPY exceeding 160 yen), and whether the exchange rate reaches this level depends on the Bank of Japan's (BOJ) policy. In this scenario, the dollar-denominated ETH price trades in the $28,000-$32,000 range. Institutional buying since the 2024 ETF approval provides support, preventing a significant decline, but considering the increase from the 2021 all-time high (approx. $4,891), further upside requires new catalysts. Tax reform discussions continue but do not lead to legal amendments within Q1 2026, remaining at the "expectation" stage. Fee-free campaigns end within a few months, and some exchanges gradually reinstate fees. Some newly entered retail investors begin profit-taking, capping price upside. The market maintains a "just right" state, with neither sharp rises nor sharp falls.
Implications for Investment/Action: ETH/USD stagnates around $30,000, Bank of Japan (BOJ) policy meeting maintains status quo, gradual announcement of fee-free campaign termination, slowdown in ETF capital inflow
Multiple positive factors converge simultaneously, leading ETH to clearly break through 5 million yen in Q1 2026 and temporarily approach 6 million yen. The conditions for this scenario are the simultaneous occurrence of two or more of the following: ① an early announcement of tax reform (decision on 20% separate taxation), ② accelerated yen depreciation (USD/JPY exceeding 165 yen) due to the Bank of Japan's (BOJ) decision to continue monetary easing, ③ successful major Ethereum upgrades (such as Pectra), and ④ expanded liquidity due to the start of ETH ETF options trading in the US. The decision on tax reform policy, in particular, will have the greatest impact on the Japanese market. If the current maximum 55% comprehensive taxation is changed to 20% separate taxation, it will simultaneously trigger reinvestment by large holders who previously refrained from taking profits and an explosive increase in new entrants. This structure is identical to the phenomenon observed in the stock market when the new NISA began in 2024. In this scenario, South Korea's Kimchi premium expands to over 10%, and speculative fervor becomes evident across Asia. ETH futures funding rates rise to over 50% annually, and leveraged long positions rapidly accumulate. However, this accumulation of leverage itself carries the risk of transitioning to a later Bear case scenario.
Implications for Investment/Action: Statement of separate taxation policy in the Tax System Reform Outline (税制改正大綱), BOJ hints at additional easing, USD/JPY breaks 165 yen, ETH ETF options trading begins, surge in Asian trading volume
A scenario where external shocks or internal structural vulnerabilities in the market materialize, causing ETH to sharply reverse and fall to the 3.5-4 million yen range before reaching 5 million yen. The most likely triggers are: ① strengthened crypto asset regulation in the US (resurgence of SEC's risk of classifying ETH as a security), ② hacking of a major DeFi protocol or discovery of smart contract vulnerabilities, ③ a sharp appreciation of the yen due to an unexpected interest rate hike by the Bank of Japan (BOJ), and ④ cascading liquidation of leveraged positions. Of particular concern is the low risk tolerance of new investors who entered through fee-free campaigns. A 10-15% drop in ETH price could trigger panic selling, which in turn induces forced liquidation of leveraged positions, potentially leading to a "death spiral" of further price declines → further panic selling → further forced liquidations. During the LUNA collapse in 2022, this chain reaction caused a drop of over 50% in a few days. If this scenario materializes, exchanges that implemented fee-free campaigns will face severe criticism, and the Financial Services Agency (金融庁) is likely to move towards strengthening regulations. A pattern similar to the regulatory tightening after the 2018 Coincheck hack would repeat, and the Japanese crypto asset market would once again enter a winter period. However, since Ethereum's technological foundation itself would not be damaged, it could present a buying opportunity for long-term investors.
Implications for Investment/Action: SEC statements regarding ETH's security classification, security incidents in DeFi protocols, unexpected BOJ interest rate hike, sharp drop in ETH futures funding rates, surge in transfers from large wallets
Key Triggers to Watch
- Bank of Japan (BOJ) Monetary Policy Meeting: Interest Rate Decision: March 13-14, 2026
- Decision on crypto asset separate taxation policy in the 2026 Tax System Reform Outline (税制改正大綱): June 2026 (Bone-thick Policy (骨太の方針)) ~ December (Tax System Reform Outline (税制改正大綱))
- Results of the Ethereum Pectra upgrade implementation: First half of 2026
- Official statements/policy shifts by the US SEC Chair regarding crypto asset regulation: Q1-Q2 2026
- End date of fee-free campaigns by major domestic exchanges: March-June 2026 (depending on campaign duration)
🔄 TRACKING LOOP
Next Trigger: Bank of Japan (BOJ) Monetary Policy Meeting March 13-14, 2026 — If interest rate hike is postponed, yen depreciation continues, accelerating ETH yen-denominated price increase; if interest rate hike occurs, yen appreciates, making ETH 5 million yen more distant
Continuation of this pattern: Tracking Theme: Ethereum Yen-Denominated 5 Million Yen Reaching Scenario — Next milestones are the BOJ March meeting (3/14) and 2026 Tax Reform discussions (June Bone-thick Policy (骨太の方針)).
🎯 ORACLE DECLARATION
Prediction Question: Will the yen-denominated price of Ethereum (ETH) exceed 1 ETH = 5 million yen by March 31, 2026?
Judgment Deadline: 2026-03-31 | Judgment Criteria: If the ETH/JPY price on CoinGecko or CoinMarketCap has exceeded 5,000,000 yen at least once by 23:59 (JST) on March 31, 2026, then "YES." If it has never exceeded, then "NO."
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