Brutal question: Can Ethereum still be chased now?

CN
1 day ago

This article is reprinted with authorization from Market Trader, author: Market Trader, copyright belongs to the original author.

In the past four months, Ethereum has surged dramatically, with its price skyrocketing from $1,380 to $4,360, an increase of 216%, making it one of the best-performing assets globally. However, it is quite unusual that this traditionally "retail investor paradise" has turned into a frenzy for institutions during this market cycle. The latest data shows that institutional holdings are growing at an unprecedented rate—according to Strategicethreserve data, as of August 12, 70 institutional treasury and Ethereum ETFs collectively held 9.49 million ETH, accounting for 7.85% of the circulating supply. More notably, Glassnode's on-chain data indicates that this price increase aligns closely with the movements of "mid to large holders": when Ethereum broke the $4,200 mark, the number of addresses holding over $10,000 in ETH surged to 868,886, reaching a nearly 13-month high. This series of data suggests that the market structure is undergoing a fundamental shift, with institutional investors becoming the main driving force behind this bull market.

To some extent, this Ethereum bull market can be seen as the ultimate test for "true believers"—very few investors have managed to hold their positions amid such rapid price increases. A typical case is quite lamentable: the established crypto investment firm Abraxas Capital had bought in the $1,600-$1,800 range but locked in profits through futures hedging around $2,300, ultimately missing out on the subsequent main upward wave, resulting in a loss of over $140 million on their ETH hedge. More dramatically, the co-founder of BitMEX, who had repeatedly predicted that Ethereum would break $10,000, misjudged the market at $3,500, believing it would drop below $3,000, and was ultimately forced to cover positions at the high of $4,200. The collective misjudgment of these "market veterans" precisely illustrates the difficulty of maintaining composure in extreme market conditions.

Currently, there is a typical cognitive bias in the market: some "fundamentalists" simply attribute this round of Ethereum's rise to capital speculation, arguing that the price surge is not synchronized with improvements in network metrics. This analytical framework may hold in traditional markets but completely misunderstands the pricing mechanism of crypto assets—in the realm of emerging assets, price is not a lagging indicator of fundamentals but rather the most forward-looking catalyst.

The rise of Solana is the most convincing example: when SOL surged from $7.8 to $130, the network effects began to accelerate—developer ecosystems exploded, user numbers grew exponentially, ultimately giving rise to the prosperity of Meme trading platforms like Pumpfun. This path clearly confirms the unique rules of the crypto market: price breakthroughs create narratives, narratives attract capital, and capital drives ecosystem development.

In fact, the phenomenon of "price leading fundamentals" is very common in innovative assets. Looking back in history, when Amazon's stock price rose 194% in 2003, its PE was still negative; during Tesla's 344% rise in 2013, quarterly delivery volumes only grew by 25%. These cases indicate that disruptive technology assets often go through a "expectation-driven" price discovery phase.

For Ethereum, the current price increase is merely the first round of value reassessment driven by the dual benefits of the "GENIUS Act" regulatory framework and the "Project Crypto" institutional strategy. This market cycle mainly reflects policy expectations, while a substantial market driven by improvements in network fundamentals (such as increased GAS consumption and TVL growth) is still brewing. However, it must be clearly recognized that the current price reflects the market's expectations for the future. When on-chain metrics show significant improvement, it often means that market expectations have been fully priced in, and the market may have entered its final stages.

For many investors who have missed out, the difficult choice they face now is: can they buy in? Although we do not recommend chasing the price, from a trend perspective, the risk of buying in now is not high, mainly for two reasons:

  1. Once a trend is established, it often has strong inertia—unless there is a significant bullish release, it is difficult to reverse. As long as the rise has not experienced a phase of accelerated volume, the likelihood of a short-term peak is low.

  2. Every bull market relies on retail participation, which typically goes through four psychological stages: observation period (doubting the authenticity of the market) → hesitation period (afraid of missing out and afraid of a pullback) → accumulation period (anxiously buying in batches) → frenzy period (fully invested chasing highs). Currently, the Google search interest for "Ethereum" is only 40% of its historical peak, the growth rate of small on-chain addresses is slow (not yet at the distribution stage), and Ethereum's rise has not been widely discussed on social media. These signs indicate that retail investors have not yet entered the market on a large scale, and the market is likely still in the second stage.

Although there is no need to fear heights in terms of trends, operationally, one should still avoid chasing prices. The timing for buying should ideally be chosen during market pullbacks—after all, bull markets often experience sharp declines (buying points during intraday drops), which can lower the average cost of accumulation to maximize returns.

Related: Ethereum (ETH) climbs to new highs, Standard Chartered raises its year-end target to $7,500

Original article: “Brutal Question: Is It Still Worth Buying ETH?”

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