Good evening everyone. I've come again to blabber about the market and as we can see what should have been is not happening. What we all expected was ethereum to follow suit with BTC. Well that hasn't happened. In fact, while BTC has been performing relatively better than making new all time highs in the last few months, ethereum has been going the other way. It is losing market share to BTC and other tokens and it is also not performing at the same level price. Action wise the price action of ethereum tells a rather demoralizing story of ethereum catching up to its usual trend.
There are a few reasons that I think attribute to ethereum not performing the way it should. And to be honest, I have already written about this topic before but I thought maybe talk about it again because there has been updated information arriving and more understanding of the broader situation surrounding this token. So first, let's get the obvious thing out of the way and that is simply the population in the second layer of blockchain and the different blockchains that are operating in layer 2. So ethereum isn't the dominating chain in the second layer like how it was in the previous bull run. There has been more competition and more tokens in the second layer and before. Most notably there is Solana and Solana’s alternate meme coin chains have helped Solana gain a new all-time high. Now the most basic understanding is that all this liquidity is eating into the supposed budget of ethereum is also performing very well with a high level of active wallets and a significant amount of day-to-day transaction limits. These features, along with the lower fees than ethereum and the lower security has reigned in many customers who could possibly invest in ethereum. Needs to be chains and the harder security of ethereum has made many ethereum a counterproductive system to operate on. But these are only the crypto factors.
The most obvious macroeconomic factor for the decline of ethereum is government bonds. Ethereum was viewed as an investment strategy as many would stake ethereum and get a certain percentage at the end of every year. But ethereum's 3% the government bonds of the USA are providing some 7%. So it is also counterintuitive for businesses to invest in ethereum. Moreover, since the BTC spot ETF has been released, there are another set of people who think that. Why should I invest in ethereum when I can invest in BTC so easily? So in this system, ethereum loses a lot of potential investors as well.
Things are not looking good for ethereum at the moment. But I believe somewhere someday at some point ethereum will bounce back because it is probably one of the most robust block chains on the internet and it truly has some commercial uses as it is quite ready. Despite its complexities and despite its rather tedious setup process, the security can provide many with a sense of calm.
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