During the bull market in 2021, ETH once surged to a high of $4,868. At that time, everyone was frantically mining and buying graphics cards, and the entire market was in a frenzy. Why was ETH so popular then? There are two main reasons:

The enthusiasm for mining among the masses

At that time, mining profits were very high; as long as you bought a graphics card and mined for half a year, you could break even or even make a profit. Almost everyone had a graphics card at home 'silently making money,' and this craze pushed ETH to its historical peak.

The graphics card speculation frenzy

Scalpers both domestically and internationally are frantically buying graphics cards, combined with Nvidia's deliberate 'squeeze the toothpaste' supply strategy, alongside AMD's relatively weaker market influence, leading to a situation of supply not meeting demand, which has spiked the enthusiasm for mining. This supply tension has further boosted ETH's market heat.

However, in this bull market, ETH has shown weakness. Why is that? The main reasons are as follows:

The flow of funds has changed

New funds prefer BTC and other projects more

In March and May 2024, the market saw funds pouring into BTC or some seemingly more explosive projects due to the approval of ETFs and new capital inflow. As a result, ETH was 'neglected.'

Newcomers have fallen in love with meme coins and new coins

Due to the economic downturn, many newcomers enter the cryptocurrency space with the idea of 'getting rich overnight,' resulting in a choice of higher-risk meme coins or newly issued coins. Some even leverage their investments, leading to liquidation or buying coins that cannot be sold. These phenomena have significantly reduced the attention and fund attraction of ETH.

Dilemmas in technology and ecology

The issuance issue from PoW to PoS

Although ETH's transition to PoS has reduced energy consumption, it has also brought some issuance pressure. Some are worried that long-term holding will continuously dilute returns, which has deterred some investors.

Insufficient ecological innovation, high gas fees

ETH's ecosystem has always been an industry benchmark, but the lack of innovation in recent years, along with high gas fees, has led many developers and users to turn to cheaper and faster new chains. Just like if a country's infrastructure doesn't keep pace with the times, funding will flow to more modern high-speed rail and highways.

Market liquidity has been severely squeezed

Liquidity is dispersed, and market funds are tight

For example, when Trump created a meme coin, it drained the already limited liquidity in the crypto space, causing many to be trapped and tightening the funding chain. Overall, the fresh blood in the market has begun to flow towards projects that are more gimmicky or have short-term explosive potential, naturally affecting ETH.

Conclusion: Long-term holding still has potential

Although ETH seems a bit 'weak' now, it is still the cornerstone of the entire blockchain ecosystem. If it can solve existing problems in the future, such as reducing gas fees and launching more ecological innovations, ETH still has a chance to revive and maintain its position as the second-largest. For those who are optimistic about the long-term development of blockchain, long-term holding of ETH remains a good choice. #加密市场观察 $ETH