Ethereum (ETH) surged 40% in the last two days, directly hitting the trending searches on Douyin, ranking first. This is the only time for Ethereum or the entire cryptocurrency circle that news could break through the noise just with a 40% increase, but due to some issues, it was quickly controlled and removed from trending searches.
Many people want to know what has happened to Ethereum in the past few days. Well, actually, I know that what everyone really wants to know isn't what has happened in the past few days, but whether it's worth buying now, right?
I will talk to everyone from two perspectives.
First, it's the aspect everyone is most concerned about but is the least useful, which is why it has risen. There are many issues to consider.
The Ethereum Pectara upgrade is the biggest hype this time. There are quite a few upgrade contents proposed by Pectra, and I will highlight a few important ones.
The core two proposals are EIP-4850 and EIP-7691. The purpose of 4850 is to simplify on-chain operations and further reduce L2 transaction costs; 7691 is to expand the capacity of data blocks to optimize performance. What is the ultimate effect? It reduces gas fees by 70% and doubles the throughput of layer 2.
For example, this Ethereum upgrade is somewhat like upgrading a phone from 2G to 5G. The surface data indeed shows a significant improvement; DeFiLlama shows transaction costs have dropped to 0.01 dollars; DappRadar shows DeFi TVL has rebounded to 80 billion dollars, and NFT trading volume has warmed up by 30%.
In simple terms, the Ethereum Pectara upgrade achieved 'cost reduction and efficiency improvement', allowing some developers who previously chose Solana due to performance issues to return to layer 2 (such as on Arbitrum and Optimism). From the perspective of DAPP growth, this number is about 20%.
Another reason for the short-term price increase is the short squeeze in the futures market. In 2024, due to tariff issues, interest rate cut expectations, and overall application performance not meeting expectations, when it dropped to 1540 dollars, the market's short positions surged (liquidation scale reached 221 million dollars)---- let's note this, as we will discuss how foolish this operation is later.
The short squeeze pushed the increase between 2300 and 2500. Because 2300 dollars is the position where shorts surrender; on May 11, 1.5 billion dollars worth of short positions were liquidated within 24 hours, which means an increase of 1.5 billion dollars in buying power.
Moving on, there are macroeconomic conditions and regulatory issues, as well as ecological recovery. Everyone understands macro issues; there are arguments for and against. It's just hindsight bias. The ecological recovery can indeed be discussed.
Ethereum's DeFi protocols account for 70% of the market. After the Pectra upgrade reduced gas fees, user growth increased by 25%. Coupled with the AI concept, it led to the creation of 1000 new DApps, with developers and funds rotating from Solana back to Ethereum.
AI integration: Ethereum supports AI agents (such as personalized services, January 3, 2025), generating new DApps (1000 new in Q1 2025, Chainalysis), attracting developers and funds.
In summary, these factors have driven the short-term rise of Ethereum, which is the most concerning issue for everyone------- but, has anyone really noticed, or asked themselves: how does understanding these things correlate with making money?
Next, let's talk about the second perspective—one that everyone doesn't want to hear, is impatient about, but can help you make money.
On March 17 this year, I wrote an article that everyone can check out now, titled (Can Ethereum Take Off Again?). Some people are too lazy to flip through, so I'll paste it here:
In the past, Ethereum was flourishing, with each round of increases surpassing Bitcoin. At that time, whatever Vitalik said was right; everyone called him 'God V'. Just in under a year, 'God V' turned into 'Dog V', and everything he did was wrong: layer 2 doesn't work, issues with foundation management, unclear vision and planning----- in summary, it's just one thing: Ethereum's price didn't rise.
What does this mean? At that time, Ethereum's price was 1854 USDT; how much has it increased now? The increase is 40.54%, experiencing 2 months of sideways movement; the breakout occurred on May 8, when it rose from 1700 dollars to 2200 dollars in one day.
Question: Which is easier to make money from, buying in advance or following rising hotspots?
Even a fool knows that buying in advance is the way to go. Now, the question arises: why was the choice at that time either to criticize Ethereum or short it? And now, why choose to go long on Ethereum and praise it?
The reason is that all your buy and sell decisions are based solely on price------ once price becomes the investment standard, you will always be a retail investor.
I tell you, if you don't change this, whether it's Ethereum, Bitcoin, or any coin, you won't make money, because short-term prices are just concentrated emotional feedback from retail investors, feedback from a mob. Foolish consensus is still consensus, but the ones who make money are the smart ones who concentrate foolish consensus.
When others say Ethereum has no value and is garbage, you follow along and criticize; when others say good things, you applaud as well. Others are the retail investors; if you follow them, you are worse than the retail investors.
You can take a closer look at the attitudes of the 'teachers' and 'gods' you follow towards Ethereum. When it dropped to 1800, they called Ethereum garbage; when it rose to 2200, they praised Ethereum as amazing------ they didn't make any money, just have a self-consistent logic to deceive their fans.
Retail investors are the smallest chips on the gambling table and cannot engage in short-term speculative trading. The only way to get results with high probability is to find a good project and invest heavily at a low price (this heavy investment should be from idle money).
So, what do you need to determine? First, whether Ethereum really has no reason for long-term appreciation, the underlying question is 'Does large capital have a sustained reason to buy it?' Second, whether this reason is sufficient (is the certainty great enough?).
Is there Ethereum? Of course. To use the Ethereum network, you must buy ETH for gas fees. As long as there are people using it, there will definitely be buyers------ as long as blockchain applications are established, it will always be this way, unless blockchain applications are falsified. If blockchain applications are falsified, you shouldn't play in this industry; it's better to run away early.
Moving further down, it's just to determine whether Ethereum will be replaced. Can it be replaced? What is the core of blockchain applications? It's decentralization. Listening to this saying about expansion being king or that saying about speed being king is useless------ you can't be faster than the traditional financial system, which has been perfected over millions of years, dominating you in terms of safety and speed from all angles.
Decentralization is what makes blockchain unique and is the competitive edge of public chains. So the question for Ethereum is: is there currently a public chain that can reach Ethereum's level of decentralization?
Where is it now? Did you see it? Once you confirm this, you can dare to buy when Solana's increase exceeds Ethereum's, and Ethereum is heavily criticized, and the price drops to a low, in order to enjoy the current 40% increase.
At this point, if you feel anxious, it means you don't have a deep understanding of this point. Your position exceeds your knowledge; you don't deserve to make this money. You need to take a step back, buy less, and focus on earning first.
Similarly, is Ethereum's future certain? Not so certain, right? Are there projects more certain than Ethereum? Yes, Bitcoin. So shouldn't you hold a bit more Bitcoin and a bit less Ethereum?
This is the explanation of 'investment is the monetization of cognition' and also the significance of systemic framework thinking.
