First, the signal of institutions "withdrawing" has appeared: Does the ETH market lack a "main engine"?
This round, ETH is approaching the historical high of $4900, with institutional funds being the real "engine". After the enactment of the U.S. stablecoin bill, Ethereum has become the preferred choice for institutional allocation due to its core position in the stablecoin ecosystem: in mid-August, U.S. spot ETH ETF saw a single-day inflow of $1 billion and a cumulative $2.2 billion over three days, directly boosting its price and scarcity — the ETH holdings on exchanges have dropped to a nine-year low, and the supply-demand structure has been rewritten by institutional funds.
However, there is a clear "turning signal" recently: multiple ETH ETFs have seen net outflows of funds, and although institutional holdings remain high, the pace of new inflows has slowed. For ETH, the "main engine" that once dominated the market has weakened, and the short-term price is fluctuating between $4700 and $4800, which is also a direct reflection of this "shift in momentum."
Second, can retail investors take over? Understanding the duality of "real power".
After the institutional tide recedes, retail investors are pushed to the forefront of the market, but this power itself carries "contradictions":
On one hand, there is the "selling pressure risk." Retail investors who entered early have made substantial profits due to the significant rise in ETH prices, and some have chosen to "cash in" — recently, the ETH recharge volume on exchanges has slightly increased, revealing a vague sense of profit-taking actions, which may bring short-term pressure on prices.
On the other hand, there is "incremental potential." The Ethereum ecosystem continues to attract new retail investors: daily active users in DeFi lending remain high, new registrations on NFT trading platforms have increased by 15% month-on-month, and RWA-related applications are driving retail investors' recognition of the value of "ETH as an ecological foundation." From discussions in crypto forums, over 60% of retail investors express that they are "waiting for a pullback to add positions," and the willingness of new funds to enter remains.
In simple terms, the power of retail investors is not "monolithic": in the short term, there may be selling pressure due to profit-taking, but in the long term, there is potential for capital replenishment due to the ecosystem's attractiveness.
Third, the "confidence" of retail investors to support the market: the hard support of technology and ecology.
If retail investors want to truly take over, the core point to look at is whether ETH has "support points that make them willing to hold long-term" — currently, these two points are the most critical:
First, the technological upgrades continue to be realized. After switching to PoS, Ethereum's energy consumption has decreased by 99%, while network block stability has improved to 99.7%; the shard technology testnet has completed multiple rounds of verification, and after its implementation next year, transaction throughput is expected to increase by 3-5 times. This technological iteration directly reduces the "risk of ecological congestion," allowing retail investors to believe that ETH can support more applications, rather than just speculating on prices.
Secondly, the irreplaceability of the ecosystem remains. In the stablecoin field, over 70% of the circulation of USDC, USDT, etc., relies on Ethereum. In the RWA sector, recent tokenization of some bonds by JPMorgan and others on Ethereum has made it the preferred chain for traditional finance to "go online." This "infrastructure status" brings resilience in demand, which is the core confidence source for retail investors to hold long-term — even if institutions withdraw some funds, as long as the ecosystem keeps expanding, the "usage demand" for ETH will not decline.
Fourth, the "hard challenges" that cannot be avoided: three hurdles for retail investors to take over.
However, for retail investors to truly support the market, there are still three hurdles that cannot be avoided:
First and foremost is "volatility tolerance." The inherent high volatility of the crypto market remains unchanged — if institutional funds continue to flow out and cause a short-term price correction of over 10%, retail investor confidence is easily impacted: historical data shows that when ETH's daily drop exceeds 5%, the amount of panic selling by retail investors doubles; this "follow-the-crowd selling under emotional transmission" may amplify volatility.
Secondly, there is "regulatory uncertainty." Global regulation is still changing: the EU recently proposed to strengthen KYC reviews for retail crypto trading, and while the U.S. SEC has temporarily loosened regulations for ETH ETFs, the characterization of "whether ETH is a security" remains ambiguous. If regulations tighten, the entry channels for retail investors may narrow, and the inflow of funds will be directly restricted.
Finally, there is the "pressure from competing products." Solana has attracted some DeFi users with low transaction fees (only $0.0002 per transaction), and Avalanche is also accelerating its layout in the RWA field. If Ethereum's shard technology implementation falls short of expectations, or if transaction fees remain high (currently 8-10 times higher than Solana), retail investors may be diverted to competing products, thereby weakening ETH's ecological stickiness.
In conclusion: the key is not whether "retail investors can or cannot," but whether "the ecosystem is stable."
After institutions exit, can the ETH bull market continue with retail investors? The essence is not whether "retail investor power is strong enough," but whether "the Ethereum ecosystem can continue to provide retail investors with 'holding reasons.'"
If the technological upgrades are implemented as scheduled and new scenarios like RWA continue to open demand, retail investors may face selling pressure in the short term, but new funds will support them in the long term, and the market may gradually rise amidst fluctuations. However, if ecological expansion slows down and regulatory or competitive shocks exceed expectations, retail investor confidence may wane, and ETH could fall into a longer adjustment.
For retail investors, what matters more than "guessing prices" at this moment is: focusing on the volume of Ethereum applications and user growth data — these "hard indicators" of the ecosystem are the core metrics for judging whether the "succession can succeed."
