Why ETH hasn't been able to rise in this cycle
(1) The pandemic led to a massive increase in the dollar supply, with ample monetary supply and liquidity, resulting in a rise in risk asset classes
(2) Ethereum PoW ≈ Deposits, purchasing mining machines with fiat to mine ETH
(3) The rising funds from BTC drive 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, leading to increased protocol revenue
(6) LP mining (especially mining to get early tokens) has a wealth effect
(7) Contract interactions yielding airdrops have a wealth effect (typical case ENS), yield farming has begun to become an industry
(8) NFTs have a wealth effect, while NFTs priced and traded in ETH serve as containers for ETH, leading people to evaluate assets in ETH terms
(9) On-chain lending provides DeFi users with approximately 0.7-0.8 times spot leverage, accelerating the ETH-centric upward spiral (of course, it also plummets when prices fall, leading to on-chain leverage liquidations; during the last bear market, on-chain lending took a negative 90% hit)
The fundamental principle of price is the supply and demand relationship; the essence of Ethereum's rise is the explosion of ETH demand:
1. Explosion of ETH application scenarios:
gas, creating ETH pair LPs, on-chain lending collateral, and trading NFTs all require ETH
2. Wealth effect driving demand:
DeFi mining for early tokens, protocol interactions for airdrops, blue-chip NFTs... have continuously generated wealth myths, driving the explosion of ETH demand; as long as the wealth effect continues, the demand explosion will not stop
3. On-chain locking of ETH supply:
Creating ETH pair LPs, purchasing NFTs, and collateralized loans have locked up ETH liquidity, reducing the ETH supply side
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