In this bull market, BTC has broken through the historical high of the previous bull market, but ETH, as the world's second largest cryptocurrency, has not yet broken through its historical high. The Ethereum Foundation recently sold ETH again, which exacerbated the decline in ETH prices.
The highest historical price of ETH was in November 2021, at around US$4,800. In this bull market, the highest price of ETH was in March this year, which was only around US$4,000.
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The current price of ETH is around $2,300, which is 40% lower than its high in March. Compared with other Altcoin that often drop by 70%, ETH's 40% drop is already quite good.
However, as the pioneer of smart contracts and the second largest cryptocurrency, the market has placed too high expectations on Ethereum. For such price performance, especially with such a big gap compared with BTC, ETH's performance is far below everyone's psychological expectations, which is certainly difficult for holders to accept.
Ethereum Foundation continues to sell off
In 2024, the Ethereum Foundation sold ETH at least 6 times. On August 24, the foundation sold as many as 35,000 ETH.
Judging from the above-mentioned selling records, after the Ethereum Foundation sold ETH, ETH basically fell, or it was sold to a stage-by-stage high price many times. Some people ridiculed the Ethereum Foundation for being good at selling coins.
The Ethereum Foundation itself is an organization that is constantly spending money. It is actually normal for it to sell off ETH to support the development of the Ethereum ecosystem. It will certainly continue to sell off ETH in the future. In order to maximize profits, of course the higher the selling price of ETH, the better.
But for ETH holders, the foundation's selling behavior will be interpreted as the project party is not optimistic about ETH, which will shake the confidence of coin holders. The selling behavior further stimulates the decline of ETH. In the case of ETH prices falling continuously, the foundation's selling is undoubtedly adding insult to injury.
As the foundation continues to sell ETH, some ETH holders are even beginning to worry about how long the foundation can keep selling. Once the foundation sells all the ETH, what will it use to support the development of the Ethereum ecosystem?
On September 5, Justin Drake, a core researcher at the Ethereum Foundation, responded that the Ethereum Foundation’s current annual budget is approximately $100 million. Based on the current price, there are still $650 million in ETH in the foundation’s wallet. Roughly estimated, the Ethereum Foundation’s financial reserves can cover 10 years of budget.
Spot Ethereum ETF continues to see net outflows
After the SEC approved the Bitcoin spot ETF, Bitcoin prices continued to rise for two months, eventually reaching an all-time high of $73,000 in mid-March.
In view of this, many Ethereum holders are also full of expectations, believing that the approval of the spot Ethereum ETF will repeat the glory of the Bitcoin spot ETF and lead the ETH price to a new high.
However, although the approval of the spot Ethereum ETF was seen as an epic positive, the price of ETH did not rise as expected, and ETH continued to experience net outflows and prices continued to fall.
Of course, objectively speaking, we cannot blame ETH entirely. The entire crypto market has been declining in recent months, and it is difficult for ETH to stabilize.
The poor performance of ETH prices is also related to the lack of strong innovation in Ethereum during this round of bull market, which has led to the market’s lack of confidence in the future of Ethereum.
In the past two bull markets, Ethereum undoubtedly played a core role as a leader.
Taking the 1CO (Initial Coin Offering) bull market as an example, Ethereum has ushered in an unprecedented new era where anyone or project can easily issue cryptocurrencies and create decentralized applications DApps on Ethereum. It has also greatly promoted the popularization and application of blockchain technology and promoted the vigorous development of the entire cryptocurrency ecosystem.
Entering a new round of DeFi bull market, Ethereum has once again become a pioneer in leading the trend.
DeFi is reshaping the financial industry at an unprecedented speed. Through smart contract technology, the DeFi platform can provide users with financial services that do not require intermediaries, are highly transparent, and are easy to operate, lowering the threshold for financial services and allowing more people to enjoy the convenience of financial technology.
During the DeFi bull market, classic DeFi platforms such as Uniswap, AAVE, Compound, and Synthetix were born, all of which have become important infrastructure in the crypto industry.
However, in this round of crypto bull market, Ethereum lacks industry innovation to compete with ICO and DeFi, and its future development is unclear. The biggest problem of the Ethereum Foundation is that it is currently unable to provide a coherent roadmap and effective leadership for the ecosystem.
Trading volume is diverted
Ethereum is the pioneer of smart contracts and the leader of public chains. However, compared with other public chains, Ethereum's transaction gas fees and transaction confirmation speed are not advantageous, which also gives other public chains an opportunity to rise.
For example, in the public chain ecosystem, Solana is far superior to Ethereum in terms of transaction confirmation speed and gas fees, which has led many DePIN and AI projects to choose to be created on the Solana public chain.
In addition to Solana and other Layer 1 public chains diverting Ethereum mainnet transaction volume, Layer 2 has also diverted part of the Ethereum mainnet transaction volume, causing Ethereum mainnet transaction volume to continue to decline and gas fees often falling below 1Gwei.
The Ethereum spot ETF has continued to experience net outflows, the Ethereum Foundation has been selling off, the ecosystem lacks innovation, and there is no clear subsequent development roadmap. These factors have caused the market to be concerned about the future of Ethereum, and the price of ETH has not been able to go up.
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In short, many people in the market are pessimistic about ETH. In addition to the problems existing in the Ethereum ecosystem itself, it is also affected by the overall market conditions of the current crypto market. Except for Bitcoin, the growth rate of most Altcoin has far exceeded that of ETH. It’s just that the market has given ETH too high expectations.
In addition, the Ethereum ecosystem is still worth looking forward to. For example, the Pectra upgrade is the next major milestone of Ethereum, which is expected to be launched in the first quarter of 2025. It will merge the Prague (execution layer) and Electra (consensus layer) updates. It is likely that the Pectra upgrade will begin to be hyped in the fourth quarter of this year.
