@hilarynancy
Ethereum’s price often influences Layer-2 tokens like Arbitrum, Optimism, and zkSync, as their ecosystems rely on Ethereum’s security and liquidity. Strong ETH rallies typically boost L2 adoption and governance tokens, while ETH downturns dampen sentiment across scaling solutions. However, L2 tokens can occasionally outperform ETH when major ecosystem upgrades or incentive programs launch. Correlation strength depends on gas fee trends, Dencun upgrade impact, and L2-specific adoption. Analyzing relative performance helps investors capture alpha by rotating between ETH and its scaling counterparts during key events.
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