ETH Foundation dumping ETH again, how long can the foundation funds last? Does ETH have a future?

Author: Tina

Editor: Xiaolu

The Ethereum Foundation recently sold ETH again, exacerbating the decline in ETH price. So, how long can the Ethereum Foundation's funds last? What about the future of Ethereum?

1. Ethereum (ETH) Price Performance

In this bull market, BTC has broken through the historical high of the previous bull market, but ETH, as the world's second largest cryptocurrency, has not yet broken through the historical high.

The all-time high price of ETH occurred in November 2021, at around $4800, while in this bull market, the highest price of ETH appeared in March this year, at only around $4000.

Currently, the price of ETH is around $2400, which has dropped by 40% from the high point in March, which is quite good compared to the 70% drop in other altcoins.

However, as the pioneer of smart contracts, Ethereum, as the second largest cryptocurrency, has been burdened with overly high market expectations. The significant disparity in price performance, especially when compared to BTC, has resulted in ETH performing well below everyone's psychological expectations, making it difficult for holders to accept.

Second, Ethereum Foundation continues to sell off

In 2024, the Ethereum Foundation has carried out at least 6 sales of ETH, and on August 24, the Foundation sold up to 35,000 ETH.

From the above few sales records, it can be seen that after the Ethereum Foundation sold ETH, ETH basically experienced a decline, or in other words, it sold at phase highs multiple times. Some people sarcastically say that the Ethereum Foundation is good at selling coins.

Ethereum Foundation, abbreviated as EF(, is a non-profit organization dedicated to supporting the development of Ethereum and related technologies. Its activities mainly revolve around providing financial and non-financial support to innovative projects within the Ethereum community.

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So, the Ethereum Foundation itself is an organization that keeps spending money, selling ETH to support the development of the Ethereum ecosystem, which is actually normal. In the future, it will definitely continue to sell ETH, aiming to maximize profits, of course, the higher the selling price of ETH, the better.

However, for ETH holders, the foundation's selling behavior will be interpreted as the project party's lack of confidence in ETH, shaking the confidence of coin holders. The selling behavior further stimulates the decline of ETH. In the case of ETH's continuous decline, the foundation's selling is undoubtedly adding fuel to the fire.

For the foundation to continue selling ETH, some ETH holders are starting to worry. How long can the foundation continue to sell like this? Once the foundation has sold all the ETH, what will support the development of the Ethereum ecosystem?

On September 5th, Justin Drake, a core researcher at the Ethereum Foundation, replied that the Ethereum Foundation's current annual budget is approximately $100 million. At the current price, the foundation's wallet still holds 650 million dollars' worth of ETH. Roughly estimated, the Ethereum Foundation's funding reserve can cover a 10-year budget.

Three, spot Ethereum ETF continuous net outflows

On July 23, the U.S. Securities and Exchange Commission (SEC) approved applications for 9 spot Ethereum ETFs, marking an important step for digital assets entering the mainstream financial market in the United States, with a trading volume exceeding $1 billion on the first day.

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After the SEC approved the Bitcoin spot ETF in the United States, the price of Bitcoin continued to rise for two months, eventually reaching a historical high of $73,000 in mid-March.

In view of this, many Ethereum holders are also looking forward with anticipation, believing that the approval of the Ethereum spot ETF will replay the glory of the Bitcoin spot ETF and lead ETH price to reach new highs.

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However, despite the approval of the spot Ethereum ETF being seen as an epic bullish signal, the price of ETH did not rise as expected, with continuous net outflows of ETH leading to a persistent decline in price.

Of course, objectively speaking, we can't blame ETH entirely. The entire cryptocurrency market has been in a downtrend in recent months, and it is also difficult for ETH to stabilize.

Insufficient Innovation in Ethereum

The poor performance of ETH prices is also related to the lack of strong innovation in Ethereum in this bull market, leading to insufficient market confidence in the future of Ethereum.

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In the previous two bull markets, Ethereum has undoubtedly played the core role of a leader.

Using the ICO (Initial Coin Offering) bull market as an example, Ethereum has ushered in a new era where anyone or any project can easily issue cryptocurrencies and create decentralized applications DApps on Ethereum, which has greatly promoted the popularity and application of blockchain technology, fostering the vigorous development of the entire cryptocurrency ecosystem.

Entering a new round of DeFi bull market, Ethereum once again becomes the leader of 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, high in transparency, and convenient to operate, reducing the threshold for financial services and enabling more people to enjoy the convenience of financial technology.

In the bull market of DeFi, classic DeFi platforms such as Uniswap, AAVE, Compound, Synthetix, etc. have emerged, and they have all become important infrastructure in the cryptocurrency industry.

But in this round of the bull market for cryptocurrencies, Ethereum lacks industry innovations that can rival ICOs and DeFi, and its future development is also unclear. As Zhu Su pointed out, the biggest problem with the Ethereum Foundation is the current inability to provide a coherent roadmap and effective leadership for the ecosystem.

The trading volume is being diverted by Solana and Layer2

As the pioneer of smart contracts and the leader of public chains, Ethereum does not have the advantage in transaction gas fees and transaction confirmation speed compared to other public chains, which has also given rise to the opportunity for other public chains to rise.

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

In addition to Layer1 public chains such as Solana diverting Ethereum mainnet transaction volume, Layer2 also takes away some of the transaction volume on the Ethereum mainnet, resulting in the continuous decline of Ethereum mainnet transaction volume, with gas fees often dropping to below 1Gwei.

Ethereum spot ETF continues to see net outflows, with the Ethereum Foundation selling off, a lack of innovation in the ecosystem, and no clear roadmap for future development, causing the market to be filled with concerns about Ethereum's future, and the price of ETH has been unable to rise.

In short, there are more pessimistic views on ETH in the current market. In addition to the problems existing in the Ethereum ecosystem itself, it is also affected by the overall market trend in the current cryptocurrency market. Except for Bitcoin, most of the altcoins have far exceeded ETH in terms of amplitude, but the market has given ETH overly high expectations.

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Furthermore, the Ethereum ecosystem is also worth looking forward to. For example, the Pectra upgrade is the next major milestone for Ethereum, expected to be launched in the first quarter of 2025. It will merge Prague (execution layer) and Electra (consensus layer) updates, and speculation on the Pectra upgrade is likely to begin in the fourth quarter of this year.