Why hasn't ETH risen in this cycle?
(1) During the pandemic, the US dollar was heavily printed, leading to ample money supply and liquidity, causing risk asset classes to rise.
(2) Ethereum PoW ≈ deposits, fiat currency purchases mining machines to mine ETH.
(3) The capital overflow from the rise of BTC pulls up the prices of altcoins.
(4) DeFi innovations led by AMM have become mainstream technology narratives, attracting the most attention and hot money.
(5) DeFi has significantly increased the adoption of EVM, enhancing on-chain activity and gas consumption, boosting protocol revenue.
(6) LP mining (especially mining head tokens) has a wealth effect.
(7) Contract interactions that receive airdrops have a wealth effect (typical case ENS), and the practice of “yield farming” has started to become an industry.
(8) NFTs have a wealth effect, and NFTs priced and traded in ETH are containers of ETH, leading people to start assessing assets in terms of ETH.
(9) On-chain lending provides DeFi users with approximately 0.7-0.8x spot leverage, accelerating the ETH-based upward spiral (of course, it also plummets during downturns, leading to chain-based leverage liquidations; the last bear market saw chain lending drop by over 90%).
The fundamental principle of price is the relationship between supply and demand; the essence of Ethereum's rise is the explosion of demand for ETH:
1. Explosion of ETH application scenarios:
Gas, creating ETH pair LPs, on-chain lending collateral, trading NFTs all require ETH.
2. Wealth effect driving demand:
DeFi mining head tokens, protocol interactions for airdrops, blue-chip NFTs… have continuously created wealth myths, driving the explosion of ETH demand; as long as the wealth effect continues, the demand explosion won't stop.
3. On-chain locked ETH supply:
Creating ETH pair LPs, purchasing NFTs, and collateralized lending have locked up ETH liquidity, reducing the ETH supply.
If you want to know more, leave 666 in the comments.
