Ethereum: Don’t let newcomers down

Written by: Fairy, ChainCatcher

Each round of bull-bear cycles always brings a group of curious new faces. In their eyes, Ethereum is often an important threshold to enter the crypto world - advanced technology, mature ecology, and solid industry status.

But is the reality really so beautiful?

On the one hand, the newcomers trust Ethereum, and on the other hand, the market is ruthless. After communicating with several college students majoring in blockchain, we found that there may be some kind of separation between their expectations and the current situation of ETH.

Are these hopeful newcomers the builders of the future, or the passers-by who are eventually ruthlessly eliminated by the market?

Ethereum from a novice's perspective: trust, technology and understanding

Tu Si

A freshman majoring in blockchain, he is a complete novice and has not yet traded cryptocurrencies or contracts.

Tu Si has not yet entered the market because he believes that he does not have enough knowledge and dares not invest rashly. However, when talking about Ethereum, he said that he has a natural sense of trust in Ethereum and believes that it is a top project and is more authoritative.

When asked whether he would buy ETH in the future, he said he would consider it because he thinks ETH's risks seem smaller than other currencies.

Lucien

A senior majoring in blockchain engineering, he mainly focuses on smart contract development and technical aspects, and has little understanding of the market. ETH accounts for 20% of his cryptocurrency spot investment. Overall, he is optimistic about Ethereum. Lucien said that from his perspective, Ethereum technology is developing, and the development of Ethereum is driving the development of the industry. For example, the upgrade of Ethereum some time ago reduced the gas fee on the chain a lot, reducing the interaction cost of users. And the improvement plan of the Cancun upgrade is also more friendly to developers. For example, the new opcode in EIP1153 has become an important part of Uniswap V4. However, he also pointed out that the framework of Ethereum is relatively mature, and the current improvements are mainly optimization, so the growth rate is relatively limited. Vernon has graduated from blockchain engineering for nearly a year, focusing on meme coins and contract trading, and prefers short-term operations.

Among all crypto assets, ETH is the only large-cap currency that Vernon has invested in, mainly for financial management and risk diversification. When talking about the reason for choosing ETH, he said that when he bought it, the price of ETH fell sharply, and it did not break the historical high in this cycle, so he thought there was still room for growth.

For the sluggish performance of ETH in this cycle, he expressed his understanding and held a similar view with Lucien - the challenge of Ethereum lies in the limited innovation. Nowadays, it is difficult for Ethereum to carry out large-scale reforms, and the pace of innovation has become cautious and fragmented.

Although the three newcomers in this exchange have different perspectives, they all have a good impression of Ethereum and recognize the value of Ethereum. In other words, Ethereum's "passerby popularity" in the newbie circle is still strong, like a "people-friendly big brother" in the crypto world. However, ideals are full, but reality may not be as they wish. The current situation of Ethereum may not be as optimistic as the newcomers see it.

Real Ethereum: How long can faith last?

ETH new demand gradually weakens

Crypto KOL Murphy published an article to reveal the current situation of investors from the current status of ETH data: high-level investors are increasing their positions, but new ETH demand is weakening. After ETH fell below $2,000, there was almost no new purchasing power.

ETH's recent cost basis distribution (CBD) shows two major holding groups:

1. High-level increase group ($3,200-$3,500): These investors did not sell during the period when ETH fell to $1,900, and continued to increase their positions, with strong faith and willingness to hold.

2. Median reduction group ($2,600-$2,800): This part of the holders gradually reduced their positions after ETH fell below $2,300, and only some of the chips are still held.

CBD data of ETH in the past 3 months

ETH "deflation failure" controversy

Hu Yilin, a Ph.D. from Peking University, wrote that the so-called "deflation" of ETH is essentially a failed design. Under the PoS mechanism, even if the total amount of ETH is decreasing, it does not mean fair or healthy development.

He pointed out that there is structural inequality in Ethereum's economic model - pledgers are always the "inflation" party, while frequent traders bear the cost of "deflation". The rich, vested interests, and old money always sit firmly in the profit zone. The more active the network transactions, the more gas fees are burned, and the more deflationary ETH is, and they are still the beneficiaries. For newcomers, retail investors, and bottom-level traders, the more frequent the transactions, the heavier the gas fee burden, and they are further squeezed by the deflation mechanism.

Hu Yilin sharply concluded: Under the ETH system, old money can not only outperform inflation with zero risk, but also enjoy interest; even under the deflation mechanism, the "faucet" on the head of old money is not only not closed, but opened more fiercely.

Whales frequently leave the market

According to the data shared by the on-chain analyst Ali, the whale address sold nearly 130,000 ETH in the past week.

• On March 13, the giant whale ..eCa41 liquidated the 6,401 ETH bought in December 2023, with a loss of 1.974 million US dollars.

• On March 14, after holding for 25 years, the ETH whale recharged 16,467 ETH to HTX, or made a profit of $13.1 million.

• On March 17, a wallet that had been dormant for 3 years sold all 67 ETH (worth $1.92 million) and earned only $126,000.

• ......

Don't let faith become a battle for survival

The world is bustling, all for profit.

The brand, technology and ecology accumulated by Ethereum over the years have shaped its trust in the eyes of newcomers, making them willing to take root, learn, try and explore here.

But the market is ruthless...

Ethereum, don’t let them learn only one thing in the end - "run fast".