Is Ethereum Really Finished?
On the 31st, CoinDesk senior analyst James Van Straten pointed out that during yesterday’s market correction, the exchange rate of Ethereum against Bitcoin fell to 0.02193, reaching its lowest level in nearly five years. The analyst also noted that historically, during halving periods, Ethereum has typically outperformed Bitcoin in the 12 months following Bitcoin’s halving. However, since Bitcoin’s halving in April of last year, it is the first time that Ethereum has not outperformed Bitcoin.
(Background: Ethereum is expected to experience severe fluctuations this week! Bitget warns that if it drops below $1,600, it may “accelerate its collapse.”)
(Background Supplement: Dormant whales are selling off large amounts of Bitcoin and Ethereum! Bloomberg analysts predict ETH may fall back to $1,000 this year.)
Ethereum’s Weak Performance
As the second-largest cryptocurrency by market capitalization, Ethereum has shown continuous weakness in this bull market. Not only has it failed to challenge its historical high of $4,878 set in the last bull market, but its support capability has also been noticeably insufficient compared to other major cryptocurrencies during multiple market downturns.
In this context, CoinDesk senior analyst James Van Straten cited Glassnode data on the 31st, indicating that Ethereum’s exchange rate against Bitcoin dropped to 0.02193 during the recent market correction, the lowest level in nearly five years. The analyst reiterated that historically, in the 12 months following Bitcoin’s halving, Ethereum’s performance has generally exceeded that of Bitcoin. However, since Bitcoin’s halving in April of last year, it is the first time that Ethereum has failed to outperform Bitcoin.
Why is Ethereum So Weak?
The analyst pointed out that the main reason for Ethereum’s poor performance stems from the tariff war initiated after President Trump took office, as well as the persistent stubbornness of inflation in the United States. This has driven investors to shift their assets towards more liquid and lower-risk assets, which is also the reason for gold’s continuous new highs.
In the cryptocurrency realm, Bitcoin is undoubtedly the asset benchmark. Furthermore, with institutional investors entering the cryptocurrency market, Ethereum not only struggles to compete with Bitcoin in terms of liquidity and risk but also sees funds originally invested in Ethereum gradually shifting to Bitcoin.
Does Ethereum Still Have a Chance to Rebound?
Whether based on analysts’ reports or community responses, investors’ confidence in Ethereum seems to have plummeted to freezing point. However, it is worth noting that Ethereum officials have consistently emphasized that they are not concerned about short-term price fluctuations but rather the long-term development of the network. Therefore, some have pointed out that the price of ETH may still have the potential to rise again in the future, for reasons including:
- Ethereum’s Pectra Upgrade: The latest upgrade, Pectra, is set to officially launch on the mainnet in April, which is expected to further enhance Ethereum’s security and scalability, attracting more users in the future.
- Staking of U.S. ETFs: In the current context of relaxed cryptocurrency regulations in the U.S., the staking functionality of Ethereum spot ETFs may ultimately receive SEC approval, which could enhance institutional demand for ETH.
- Growth of RWA: As a decentralized network focused on security, Ethereum boasts a thriving DeFi ecosystem and is also an ideal blockchain for hosting RWA (real-world assets). Therefore, once RWA begins to truly explode, the price of ETH may still be empowered again.
In summary, the current softness of ETH’s price and the exodus of investors are realities that Ethereum must face. However, the aforementioned positive factors regarding ETH’s potential rebound are not without possibility. Let’s continue to observe how ETH’s trend unfolds in the future.
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