Ethereum Foundation Continues Selling ETH, Can ETH Price Hold On?

Ethereum Foundation Continues Selling ETH, Can ETH Price Hold On?The Ethereum Foundation's ongoing ETH sales have intensified the decline in ETH price, triggering concerns about the future development prospects of Ethereum. Can ETH replicate the glory of Bitcoin spot ETFs? How long can the Ethereum Foundation's funds sustain, and where will Ethereums future go? This article will delve into the current challenges faced by Ethereum and its future development direction

Ethereum Foundation Continues Selling ETH, Can ETH Price Hold On?

The Ethereum Foundation's ongoing ETH sales have intensified the decline in ETH price, triggering concerns about the future development prospects of Ethereum. Can ETH replicate the glory of Bitcoin spot ETFs? How long can the Ethereum Foundation's funds sustain, and where will Ethereums future go? This article will delve into the current challenges faced by Ethereum and its future development direction.

I. ETH Price Performance Is Lackluster

In this bull market, Bitcoin has broken through the all-time high of the previous bull market. However, Ethereum, the world's second-largest cryptocurrency, has failed to break its historical peak. ETH's all-time high was reached in November 2021, at around $4800. In this bull market, ETH's highest price was reached in March this year, only around $4000. Currently, ETH price hovers around $2400, down 40% from its March high. While ETH's 40% decline seems relatively stable compared to other altcoins' 70% drops, as the creator of smart contracts and the world's second-largest cryptocurrency, the market has held high expectations for it. Compared to Bitcoin, ETH's performance has fallen far short of expectations, making it difficult for holders to accept.

II. Ethereum Foundation Continues to Sell ETH

In 2024, the Ethereum Foundation has sold ETH at least 6 times. Among them, on August 24, it sold as many as 35,000 ETH. After each sale, ETH generally experienced a decline, even selling at a stage-high price several times. Some people jokingly say that the Ethereum Foundation "is good at selling coins."

The Ethereum Foundation (EF) is a non-profit organization dedicated to supporting the development of Ethereum and related technologies. Its primary activities include providing financial and non-financial support to innovative projects within the Ethereum community. Therefore, the Ethereum Foundation itself is an organization that constantly spends money. Selling ETH to support the development of the Ethereum ecosystem is completely normal. The Foundation will definitely continue to sell ETH in the future. For maximum profit, it naturally hopes to sell at a higher price.

However, for ETH holders, the Foundation's selling behavior is interpreted as the project party not being optimistic about ETH, shaking the confidence of holders and further stimulating the decline of ETH. Under the circumstances where ETH price continues to fall, the Foundation's sales undoubtedly add insult to injury.

Regarding the Foundation's continued sale of ETH, some ETH holders are starting to worry about how long the Foundation can sustain this continuous selling. Once the Foundation has sold all its ETH, what will it use to support the development of the Ethereum ecosystem? On September 5, Justin Drake, a core researcher at the Ethereum Foundation, replied that the Ethereum Foundation's current annual budget is approximately $100 million. Based on the current price, the Foundation's wallet still holds $650 million in ETH. Roughly estimated, the Ethereum Foundation's financial reserves can cover 10 years of budget.

III. Spot Ethereum ETF Continues to Experience Net Outflows

On July 23, the U.S. Securities and Exchange Commission (SEC) approved applications for 9 spot Ethereum ETFs, marking a significant step for digital assets entering the mainstream U.S. financial market. The first-day trading volume exceeded $1 billion. After the SEC approved the Bitcoin spot ETF, the price of Bitcoin continued to rise for two months, eventually reaching an all-time high of $73,000 in mid-March.

Given this, many Ethereum holders were also full of hope, believing that the approval of spot Ethereum ETF would replicate the glory of Bitcoin spot ETF, leading to a new high for ETH price. However, although the approval of spot Ethereum ETF is considered an epic positive development, ETH price has not risen as expected, but instead has experienced continued net outflows, with the price continuously falling.

Of course, objectively speaking, we can't entirely blame ETH. The entire cryptocurrency market has been experiencing a downward trend in recent months, and ETH can't stand alone.

IV. Ethereum Lacks Innovation

ETH's poor performance is also related to the lack of powerful innovation in Ethereum during this bull market, leading to market confidence in Ethereum's future.

In the previous two bull markets, Ethereum undoubtedly played the core role of leader. For example, in the ICO (Initial Coin Offering) bull market, Ethereum ushered in a new era, allowing anyone or project party to easily issue cryptocurrencies and create decentralized applications (DApps) on Ethereum. This significantly promoted the popularization and application of blockchain technology, fostering the vigorous development of the entire cryptocurrency ecosystem.

Entering the new round of DeFi bull market, Ethereum once again became the pioneer of leading the trend. DeFi is reshaping the landscape of the financial industry at an unprecedented speed. Through smart contract technology, DeFi platforms can provide users with financial services that are intermediary-free, transparent, and easy to operate, lowering the threshold for financial services and enabling more people to enjoy the convenience of financial technology. In the DeFi bull market, classic DeFi platforms like Uniswap, AAVE, Compound, and Synthetix emerged, all becoming important infrastructure in the crypto industry.

However, in this round of crypto bull market, Ethereum lacks industry innovation comparable to ICO and DeFi, and its future development is unclear. As ZhuSu said, the biggest problem with the Ethereum Foundation is that it currently cannot provide a coherent roadmap and effective leadership for the ecosystem.

V. Trading Volume Is Diverted by Solana and Layer 2

Ethereum, as the creator of smart contracts and the leader of public chains, has advantages in transaction confirmation speed and gas fees compared to other public chains. This has given other public chains the opportunity to rise.

For example, the Solana public chain, whether in terms of transaction confirmation speed or gas fees, is far superior to Ethereum, leading many DeFi and AI projects to choose to create them on the Solana public chain.

In addition to Solana and other Layer 1 public chains diverting transaction volume from the Ethereum mainnet, Layer 2 has also taken away some of the transaction volume from the Ethereum mainnet, leading to a continuous decline in the Ethereum mainnet's transaction volume and gas fees frequently falling below 1 Gwei.

The continued net outflow of spot Ethereum ETF, the Ethereum Foundation's sales, the lack of innovation in the ecosystem, and the absence of a clear future roadmap have led to concerns about Ethereum's future, and ETH price has remained stagnant.

In summary, there are currently more bearish views on ETH in the market. Besides the problems in the Ethereum ecosystem itself, it is also affected by the overall cryptocurrency market trend. Except for Bitcoin, most altcoins have experienced a much larger decline than ETH, but the market has had too high expectations for ETH.

VI. Future Prospects of the Ethereum Ecosystem

Although Ethereum faces challenges, its ecosystem is not without bright spots. For example, the Pectra upgrade will be Ethereum's next major milestone, expected to be launched in the first quarter of 2025. It will merge the Prague (execution layer) and Electra (consensus layer) updates. It is possible that Pectra upgrade hype will start in the fourth quarter of this year.

In addition, the Ethereum developer community remains very active, constantly coming up with new projects and applications. Ethereum's long-term vision and technological potential continue to attract numerous developers and investors.

Conclusion

The Ethereum Foundation's continued selling of ETH, the lack of innovation in the market, and the diversion of trading volume have all put immense pressure on ETH price. However, the long-term development prospects of the Ethereum ecosystem still warrant optimism, and future developments like the Pectra upgrade will bring new opportunities for ETH. Ultimately, whether Ethereum can regain its former glory will require time and market validation.