The price of ETH/BTC has fallen to the low point of April 2021,
people began to question the subsequent value of ETH,
especially when BTC rises.
Below are perspectives of FUD regarding ETH:
1. Poor ETF performance
It is well known that due to regulatory restrictions, Ethereum ETFs cannot include POS staking mechanisms,
the lack of this mechanism reduces the attractiveness of the ETF,
further significantly weakening market interest in ETH. Compared to ETH, BTC ETF inflows are strong, and with the U.S. economic policies and global market uncertainties, more funds flow into the relatively safe Bitcoin.
2. The rise of Solana
A large number of developers from the ETH ecosystem turning to Solana is also seen as the beginning of ETH's decline, while the ETH community has turned to Farcaster, creating a clear gap with social platforms like Twitter, commonly referred to as narrowing the path.
The continuous wealth effect of Solana and expectations for high-performance blockchains have attracted a lot of hot money, which has gradually become consensus.
3. Adverse token supply dynamics
In simple terms, the deflationary narrative cannot continue.
Ethereum's supply has become more inflationary after recent upgrades, especially after the implementation of EIP-4844, the burning rate of Ethereum has decreased, leading to supply growth.
4. Overly complex ETH ecosystem structure
Ethereum's scalability relies on various Layer-2 solutions, and the diversified Layer-2 options have led to fragmentation of the user market (not just liquidity fragmentation), which easily reduces the attractiveness and usage of ETH.
Moreover, Layer-2 was supposed to enhance transaction efficiency and scalability. However, due to many transactions being moved to Layer-2 chains, the burning mechanism of the mainnet has weakened. Although this expansion strategy successfully alleviated congestion and costs on the mainnet, it weakened the ability to reduce supply through burning, leading to ETH being in an inflationary state.
5. Collective selling by large ETH holders
The continuous selling by the Ethereum Foundation has struck the confidence of ETH holders, and additionally, the frequent selling by large sellers, such as Metalpha selling $90 million worth of ETH, has also weakened the confidence of long-term ETH holders.
