ETH surged 7% this week, currently only 2% away from the historical peak of $4,891 in 2021, but on August 16, gas fees dropped to 0.396 gwei, the lowest in five years! In contrast, BTC fell below $120,000 even after Powell released optimistic signals, with funds wildly flowing from BTC to ETH, and the ETH/BTC ratio even breaking the 0.04 resistance level (the first time since the election season).
Stop worrying about 'whether this is a precursor to a bull market'—the current ETH market is not 'preparing for a bull,' but is 'already in a bull,' and it is a 'new bull market' that is more stable than in 2021. In the past, ETH's rise relied on 'speculating on concepts'; now its rise relies on 'hard strength.' Three core signals will help you see the essence!
1. First, break the misconception: low gas fees do not mean no one is participating; it means Ethereum is 'not congested anymore.'
In the 2021 ETH bull market, gas fees once soared to 300 gwei, with the transaction fee for transferring 1 ETH exceeding $100; today, ETH's daily trading volume is 30% higher than the peak in 2021, and active addresses exceed 700,000, yet the median gas fee is less than 1 gwei, with transfers costing only a few dimes.
The key reason is that two 'critical upgrades' resolved the congestion issue:
EIP-1559 protocol: Bid farewell to the 'retail bidding for blocks' model, introducing a 'base fee burning' mechanism, automatically adjusting fees during congestion to eliminate outrageous situations like 'hundreds of gwei';
Layer 2 diversion: 80% of DeFi transactions and NFT minting have moved to second-layer networks like Arbitrum and Optimism. For example, swapping tokens on Uniswap via Arbitrum incurs a fee of only $0.10, which is 100 times cheaper than the mainnet (L1). The mainnet is only responsible for 'secure settlement,' greatly reducing pressure, hence gas fees naturally decrease.
This is not 'no one is participating'; rather, Ethereum has upgraded from a 'small supermarket' to a 'large shopping mall,' accommodating more users, completely solving the old issue of 'congestion upon price increases.'
2. Funds abandon BTC for ETH: this is not a short-term shift but a long-term stance.
Recently, the trends of BTC and ETH have been 'fire and ice':
BTC: Affected by the decline in safe-haven demand, it dropped from 125,000 to 118,000, with retail and institutional investors reducing their holdings;
ETH: Rising against the trend by 7%, the ETH/BTC ratio broke the 0.04 resistance level that had held for half a year, allowing 1 ETH to be exchanged for more BTC.
Behind this is the choice of funds for 'future value':
BTC's core is 'safe-haven attributes.' Currently, with the Federal Reserve pausing interest rate hikes, the demand for safe havens has weakened, and its attractiveness has declined.
The core of ETH is 'practical value', with its total DeFi locked value (TVL) approaching $100 billion (the peak in 2021 was only $70 billion). $100 billion is being used in the ecosystem for staking, lending, and trading—these funds are not for 'speculating' but for 'earning through ETH' (for example, ETH staking yields an annualized 6.5%, far exceeding bank returns).
An institutional insider revealed that they recently reduced their BTC holdings by 20% and increased their ETH holdings by 30%. The core logic is: 'BTC can only profit from price increases, while ETH can both increase in price and generate income through staking. The more active the ecosystem, the more stable its value; this is a long-term certainty opportunity.'
3. Is the new bull market more stable than in 2021? Look at two 'hard indicators.'
In the 2021 ETH bull market, prices surged and fell sharply, dropping from $4,891 to $881, primarily due to speculation on NFTs and MEME coins, lacking actual demand support; today's rise has two hard core support factors:
Low gas fees + high trading volume provide ample incremental space.
When ETH rose to $4,800 in 2021, high gas fees deterred a large number of potential users. Now that gas fees are low, even with more retail and institutional investors entering, the network can handle it, making the market more sustainable.
TVL approaches $100 billion, and the ecosystem's 'blood generation capacity' is upgraded.
ETH's TVL rose from $30 billion in 2023 to $98 billion. These funds create a 'positive cycle': for example, staking 10 ETH allows borrowing 5 ETH for DeFi profits, enabling the purchase of more ETH. The ecosystem not only has 'participants' but also allows 'continuous profit generation'—this is the core driving force for the continuation of a bull market.
4. Practical advice: Now is the time to invest in ETH; pay attention to these two points.
For those who haven't invested: Don't chase the highs; wait for a pullback to $4,600-$4,700.
Current ETH spot price is $4,800, only 2% away from its previous high. In the short term, there may be profit-taking (e.g., those who entered at $4,200 have gained 15% and may take profits). $4,600-$4,700 is a safe entry point, with a stop-loss set at $4,500 (if it falls below, the short-term upward trend may pause).
For current holders: Don't panic sell, keep a close eye on the ETH/BTC ratio.
As long as the ratio remains stable above 0.04, it indicates that funds are still flowing into ETH, and it can be held; if the ratio falls back below 0.038, reduce holdings by 1/3 to preserve profits.
Additional reminder: Pay more attention to L2 dynamics (such as changes in TVL of Arbitrum and Optimism). The more active L2 is, the stronger the demand for ETH, and the higher its long-term value. We will later share on-chain ETH data (gas fees, TVL changes, etc.) in the fan group, making data-driven decisions more reliable than blind guessing.
To be frank: In the 2021 ETH bull market, you may have missed opportunities due to high gas fees; this time in 2024, with low gas fees, a vibrant ecosystem, and continuous inflow of funds, you might have to wait another 4 years if you miss out. But remember: Don't be greedy in a bull market—hold your positions steady and set stop-losses to secure your profits!
