Ethereum still holds an important first-mover advantage in the decentralized field, but whether it can maintain its core value requires finding a new balance between L2 development and other narrative trends. This article is written by BTC_chopsticks, and compiled, translated, and written by PANews.
Summary:
Ethereum (ETH) was once considered the “blue chip asset” of the crypto market, with many believing its price would reach new highs in the future, possibly surpassing $10,000.
However, since 2022, ETH’s performance has been lackluster. Does this indicate challenges ahead for Vitalik and Ethereum? Let’s delve deeper into the reasons behind this.
Over the past two years, significant upgrades to Ethereum have raised high expectations for its future, especially with the “deflationary” effect on ETH supply. However, the market’s actual performance has been surprising. Despite a series of scalability and upgrade efforts, ETH’s market performance has been relatively lackluster, even significantly lagging behind BTC and other tokens like Solana.
Many people were expecting the launch of an ETH ETF to drive up the price of ETH, but the results were disappointing. Unlike the bull market that followed the launch of the Bitcoin ETF, the ETH ETF listing resulted in capital outflows, partly due to selling pressure from Grayscale’s legacy products.
While the Ethereum Merge and EIP-1559 successfully reduced ETH’s issuance, the latest Dencun upgrade, while lowering the cost of data writing on the main chain, indirectly reduced ETH’s source of income, unexpectedly decreasing the token’s appreciation potential.
Ethereum founder Vitalik recently sold a portion of ETH to support development. Although the amount sold was relatively small, the market reacted negatively to this. Some investors believe this may imply a lack of confidence from Vitalik in ETH, although Vitalik has repeatedly stated that the price of ETH is not his priority.
Many emerging trends in the market, such as AI, RWA (Real World Assets), and memecoins, have mostly not chosen Ethereum as their main platform. Many emerging AI projects (such as Fetch, TAO) and RWA projects have chosen more suitable independent networks and underlying architectures, while in the memecoin field, Solana’s performance has been more impressive. This suggests that while Ethereum has opened the door to decentralization, other networks are becoming the leaders of the latest narrative.
ETH still remains a key force in the decentralized finance (DeFi) ecosystem, occupying over 55% of the total locked value. However, with the widespread adoption of L2 scaling solutions, the future of Ethereum may face the dilemma of “ecosystem prosperity but unfulfilled token value,” similar to $ATOM in the Cosmos ecosystem.
Although I once firmly believed that the price of ETH would reach $10,000, I am now more cautious about this goal. ETH still accounts for 30% of my investment portfolio, but in the next bull market cycle, I may gradually sell off some assets and hold the remaining portion to observe its future performance.
While Ethereum’s network utility and ecosystem status remain solid, its recent performance has raised concerns in the market. Although ETH still leads the industry, if it fails to adapt to emerging trends, it may gradually lose some of its dominant position in the future. Ethereum still holds an important first-mover advantage in the decentralized field, but whether it can maintain its core value requires finding a new balance between L2 development and other narrative trends.