Did Vitalik mess up? Is #Ethereum done for?
The reasons behind Ethereum's underperformance
In 2022/2023, everyone was bullish about Ethereum and its updates!
People said, "The ATH was $4.6K, and now that it's less inflationary, the next ATH will be $10K."
I used to think the same, but reality has been different.
Despite the updates and scalability improvements, many things just aren't working for Ethereum.
We expected ETH to outperform everything due to its updates, but the opposite has happened.
It’s underperforming compared to BTC and other cryptos like Solana, which has increased its market weight sixfold against ETH.
And let’s not forget BTC’s growing dominance over ETH.
Many thought this trend would reverse with the launch of the ETH ETF, but it turned out to be a major flop!
While the Bitcoin ETF gave BTC a huge boost, ETH’s price has dropped below its pre-ETF level.
The main reason is that outflows from ETH ETFs are currently outpacing inflows.
Much of this is due to investors dumping Grayscale’s legacy ETH products. According to some experts, these outflows should ease soon.
Ironically, Ethereum’s updates have improved the network but hurt $ETH.
The Merge reduced inflation, and EIP-1559 even made ETH deflationary at times.
On paper, these changes should have been great for price action.
However, the Dencun update, which introduced Proto-Danksharding to reduce rollup costs when writing data to the main chain, has had unintended consequences.
It’s great for rollups, reducing costs by as much as 95% in some cases (like Arbitrum), but this has reduced ETH’s potential earnings.
Another concern is Vitalik selling ETH to fund development.
While these sales are insignificant compared to the overall ETH volume, they’ve caused FUD.
People are asking, "Why is Vitalik selling his own tokens? Does he no longer believe in the project?"
In reality, Vitalik has made it clear that he doesn’t care about the price of ETH.
He’s willing to sell ETH at any price to fund development.
So no, Vitalik isn’t selling at the top; he simply doesn’t care about timing. Still, I understand why people find this worrying.
That said, ETH is far from dead.
It still dominates with over 55% of the Total Value Locked in DeFi, not to mention the 5% held by rollups, bringing the total to around 60%.
This share hasn’t declined much, showing that the Ethereum network continues to improve.
Let’s not forget that Ethereum started the DeFi movement with the first smart contract.
Ethereum is not a hype surfer, it’s a hype creator!
But that’s part of the problem: Ethereum no longer rides the waves of the latest hype.
ETH is missing out on major narratives like AI, RWA (Real World Assets), and meme coins.
Major AI projects like Fetch or TAO have their own independent networks, which are easier to build from scratch than on Ethereum.
The same goes for RWAs.
Big RWA projects realize they need their own Layer 1 to overcome certain limitations.
@MANTRA , for example, built its own L1 on Cosmos to create a more suitable ecosystem for RWAs.
Even in the meme coin space, Solana is leading the charge, registering far more volume than Ethereum.
Ethereum seems to open the door, but other networks end up taking the lead in these major narratives.
Are we heading towards an ecosystem where the ETH coin gets forgotten?
Similar to Cosmos, where thousands of innovations happen but don’t necessarily benefit the $ATOM coin?
ETH might face a similar fate, enabling the growth of Layer 2s without accruing much value itself.
Personally, I have always believed that $ETH could reach $10K, which was my target for the sale.
Today, I’m much more pessimistic. ETH still makes up about 30% of my portfolio, but I plan to sell a significant portion at the next ATH and hold the rest for the long term.
