Ethereum seems to be killing it lately. Do you notice something remarkable about it lately? I particularly noticed that, because let me tell you, I have been shorting Ethereum since $2000. So that has been a couple of months now, and the performance of that particular position is…. pathetic.

Ethereum's price has been stubborn. It is seemingly unfazed with all the FUD around. Yes, when the market is dumped ETH price is affected too. However, often am amazed at how the ETH price would just recover to the original pre-dump point.

What is exactly happening? Even when we don’t talk about high demand, it seems that holders are also reluctant to sell.

Ethereum is an advantage these days compared to Bitcoin. For one, it’s the crypto asset that ticks all the boxes.

It’s the strongest smart contract coin and has the largest market cap.

It’s the native-st of native asset of the Ethereum chain.

It doesn’t have counterparty risks like bridged assets.

It doesn’t have TradFi black swan risk like stablecoins. (Until some time ago, stablecoins were preferred as a bear market safe asset until the March bank run happened.)

It gives you yield if you stake it.

It is the base currency to buy other assets and pay for gas fees.

Furthermore, Vitalik often said how Ethereum benefits from a massive and supportive community, watchful for any potential issues happening on the network. I very much acknowledge this statement. It’s true how the Ethereum community is filled with passionate people. They are pretty persistent in their commitment to decentralization and security. With 9731 nodes running across the globe according to Etherscan, Ethereum is the most decentralized layer 1 out there.

The community however rates itself as only 58% decentralized taking into consideration of many metrics (i.e. client diversity) and their own high standard. Screenshot from Project Sunshine.

No more sell pressure

Another compelling reason for this continuing accumulation of ETH is, there’s no longer a threat of mass-selling. We had that a while ago with the Shanghai upgrade that opened unlocks for staked ETH. Some months passed, and the current queue for staking has demonstrated a bullish trend instead bearish like it was feared. People are more eager to stake rather than unstake.

from wenmerge.com

On the other hand, BTC finds itself in a more unfortunate situation. The US government is set to sell the remaining 40k of silk road seized BTC this year. Meanwhile, Mt. Gox BTC distribution looms ahead. Given the current attractiveness of ETH, it is reasonable to assume that long-awaiting Mt. Gox customers will promptly swap their BTC to ETH once they regain possession of their long-lost Bitcoin.

The next narrative on Ethereum staking

We all know how staked ETH can be used further in DeFi money Lego. However, recently a new trend emerges only well-informed investors know. This mysterious trend has led to an increase in demand for Ethereum staking, evident in the long queues of new validators eager to participate.

If you read Vitalik's recent blog post “Don’t overload Ethereum’s consensus”, you might get the gist of what I am talking about. It’s a trend that needs to be approached with caution because it would lead to disastrous consequences if executed poorly.

Vitalik’s post mentioned EigenLayer.

https://www.eigenlayer.xyz/

Yes. Not only can you stake ETH to earn the base yield, but you also have the opportunity to restake it for additional yield. Vitalik provided an interesting example in his writing: If Dogecoin decided to go proof of stake and want Ethereum validators to help secure its network.

This mechanism has its own complications and risk. Regardless, people are experimenting, and with the long queue on staking, they’re definitely preparing.