“The Ethereum car is still too heavy and has not yet washed most people off the bus.”
Let me give you a conclusion first: when Bitcoin rose to 98,000, everyone was unhappy, but when Ethereum rose to 3,200, many retail investors were excited, which shows that most retail investors do not have Bitcoin. Ethereum's "car" is still too heavy, and many people have not been "thrown off" yet.
Everyone has been comforting themselves for a long time, but if this round of Ethereum really doesn’t improve and becomes the next “EOS”, then I just want to say that if Vitalik doesn’t apologize, I really want to beat him up every time I see him.
As for the topic of "Ethereum changing dealers", it has sparked discussions among many staunch holders and opponents of ETH. I would like to share some more thoughts here.
1. Who is “Xinzhuang”?
During this market clean-up, we have seen that the initial industry OGs (those who participated in ICO back then) have become the dominant market makers today, and in the future even national-level market makers may get involved.
However, TVBee provided a new perspective: as Ethereum switches from POW to POS, the dealer will definitely change. The original mining pool did not have a sustainable profit model, so there was no motivation to pull the market. New mining pools may participate, but they do not have enough chips and cannot drive the market. However, when the price of Ethereum fell, it did not fall too much because there were new dealers at the bottom.
This means that Ethereum's transition from POW to POS is actually the replacement of the old miners and dealers with the new POS miners and dealers.
However, the question is, although Ethereum was successfully upgraded in September 2022, it experienced more than a year of bear market in between. Why was there no sufficient turnover during the bear market?
What is even more strange is that Ethereum still performs poorly until 2024, especially after the ETF is passed, the BTC/ETH exchange rate has fallen all the way. Therefore, it is possible that it is not that the POW miners have been replaced by new POW dealers, but that the ICO bosses of the year have been replaced by Wall Street dealers.
2. Is the “Ethereum change of dealer theory” also telling its own story?
In fact, there are already many signals in the market that indicate this, such as the approval of the ETF, the start of the current pledge expectation, and the increase in holdings by top addresses, which are all relatively positive signals.
Overall, the fundamentals of ETH have not changed, and it is still the source of many innovations, especially in blockchain and decentralized applications. Moreover, now with the support of ETF, it means that more funds may flow in in the future. At the same time, the passage of ETF also provides positive expectations for the opening of the pledge mechanism, further injecting momentum into the ETH market. In addition, the top addresses are constantly increasing their holdings, which is undoubtedly good news.
So, in the face of such good news, how can we easily give up our chips at this moment?
3. Ethereum has many advantages, but there are also some issues that need attention:
First of all, compared with Bitcoin, many outsiders do not have a high degree of recognition of Ethereum. Therefore, only when traditional financial institutions have configured Bitcoin and start looking for new opportunities will everyone turn their attention to Ethereum.
Secondly, among the Layer1 public chains, especially compared with Solana, ETH’s biggest problem is that it focuses too much on infrastructure construction and lacks in application layer development.
Furthermore, the trend of moving away from C-end users has gradually made the development direction of Ethereum move away from the actual needs of ordinary users. In this case, how can ordinary users hold ETH? Therefore, the Ethereum ecosystem must have a killer application to attract more ordinary users.
In addition, interoperability between L2s is also a key point. Ethereum is "fighting" with a bunch of L2s, but the biggest problem is that the connections between these L2s are loose, which not only leads to poor user experience, but also makes liquidity dispersed. Therefore, L2 interoperability is crucial, and there are some solutions being tried now, such as chain abstraction.
4. Carve Sol to ask for the sword
Solana’s change of dealers occurred after the collapse of FTX, but Ethereum has not yet encountered a similar major negative impact to clean up the market, so its “change of dealers” process appears to be longer and requires more time to slowly clean up the floating chips in the market.
Some people may ask: What are the disadvantages of Solana compared to Ethereum?
Solana is actually an enhanced version of Ethereum, which improves transaction speed but compromises on decentralization and security.
Many people think of Solana as just a faster Ethereum.
However, Ethereum has a consensus mechanism, ecosystem, and community support, which are its hidden moats.
Simply put, just as you cannot replace WeChat with a smoother WeChat, you cannot defeat Ethereum with a more powerful Ethereum.
Market competition is actually a dimensionality reduction attack, rather than a parallel alternative competition.
Solana did not bring a dimensionality reduction attack to Ethereum, which is also its "native shortcoming."
5. ETH’s car is too heavy
Ethereum now gives people a feeling of "washing out all small and medium- and long-term investors", mainly because its "car" is too heavy. Too many people have high expectations for it, and there is no obvious big negative in the market, so it can only be washed out gradually through a long period of washing.
Most retail investors do not have Bitcoin, but they basically have Ethereum. Everyone is eager for higher returns, and they look down on the "stable" returns of Bitcoin. Between Bitcoin and Ethereum, many people choose Ethereum, which seems to have more room, which makes Ethereum's "car" heavier and heavier, and finally forms the current situation.
6. The BTC/ETH exchange rate has dropped from 0.05 to 0.03 now. Will it continue to drop in the future?
Considering the cyclical nature of the crypto industry, bull markets are usually short, while bear markets last longer. This round of bull market started early, and if the market continues to be cleaned up, it may affect the continuation of the bull market, so the probability of this happening is relatively small.
7. Someone asked: Why didn’t you slowly change hands of ETH when the price was low before, but change it here now that it has risen?
One possible reason is that the ETH ETF passed too quickly, beyond market expectations. Many people originally thought that it would take at least until the second half of 2024 to see the passage of the ETH ETF, which led to a rapid rise in the price of ETH at the time, but the market turnover was not sufficient.
8. Can this wave of market conditions get Justin Sun out of the market?
To be honest, the issue of cutting leeks is still the same as always. Who can get rid of Brother Sun?
You have to know that Justin Sun has 700,000 Ethereums, which is worth 2.1 billion US dollars at a price of 3,000 US dollars.
If you want to get Justin Sun out of this mess, it will probably take a lot of time.
9. With so many people in the market creating FUD, should I change my Ethereum position?
I can only say that although I feel bad, I still have to hold on. I have survived a whole bear market, and the sunk cost is already so high. If I change my position now, I might miss the last chance before dawn.
10. When will Ethereum lead the altcoin season?
This is really hard to guess, but the trend is visible.
Just like we can’t guess what the temperature will be tomorrow, but we can feel that winter is coming, the change of seasons is obvious.
