$ETH
- Technical and Ecological Issues: The development of Layer 2 ecosystems has improved transaction performance, but has significantly diverted users and funds, diluting the value of the Ethereum mainnet. The reduced blob fees after the upgrade have lowered transaction costs, but weakened the rate of ETH destruction, leading to rising inflation. Additionally, compared to the past, Ethereum did not lead any significant technological breakthroughs in 2024.
- Market Competition and Insufficient Narrative: Solana has become the main battleground for meme coins due to low costs, fast transaction speeds, and infrastructure like pump.fun, attracting a large number of retail investors and social media attention. Its narratives, such as "animal rescue," resonate with the public's emotions, while Ethereum's Layer 2 narrative is overly technical, making it difficult to evoke emotional resonance among investors.
- Strengthening of Bitcoin's Dominance: Bitcoin's market dominance has shown a steady upward trend in 2024, with increased investor preference for Bitcoin, leading to a relative decrease in capital allocation to Ether, and the ETH/BTC ratio continues to decline.
Recent Reasons for Investor Interest in Ethereum
- Promotion of Spot Ethereum ETFs: Spot Ethereum ETFs have recently attracted net inflows of up to $2 billion, while the net inflow for the previous four months was only $250 million. The significant influx of funds indicates a marked increase in investor interest in Ethereum, which may also attract more investors to follow suit and buy in.
- Accumulation of Ethereum's Technology and Applications: In the long run, Ethereum's Layer 2 and restaking technologies provide a solid foundation for large-scale applications. Its strong technological accumulation and wide range of application scenarios still exist. As the market further recognizes and explores its technology and applications, investor confidence in Ethereum is gradually recovering.
- Changes in Market Environment: The entire cryptocurrency market is continuously evolving and changing, and investors' portfolios are also constantly adjusting. With assets such as Bitcoin and Solana experiencing significant increases in 2024, some investors may shift their focus to Ethereum, which has relatively smaller gains but potential, in search of a more balanced investment portfolio and potentially higher returns.
