The long-term holders of Ethereum have surpassed those of Bitcoin, a phenomenon that has only happened twice. The value’s increase supports a pertinent market theory: Ethereum is still in the accumulation phase in spite of the market’s generally poor performance.
The “Hodler Ratio” figure shows that a greater proportion of Ethereum owners than Bitcoin are currently dedicated to retaining their holdings for the long term. This measure is important since it shows how confident investors are in the network’s future.
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There are several reasons why Ethereum has been able to overtake Bitcoin in terms of the proportion of long-term holders. Investor trust has increased as a result of the Ethereum network’s ongoing growth, which includes the revised road plan and the expanding ecosystem on Layer 2 networks. Moreover, most investors think Ethereum is still a ways behind and hasn’t reached its full potential in the market.
On the other hand, a large proportion of long-term holders may have a double-edged effect on a network’s functionality. Although it is a sign of confidence and long-term thinking, it can also result in less liquidity and perhaps impede the performance of prices in the short term. This is usually viewed as a good thing during the accumulation phase as it indicates that investors are hanging onto their money and may eventually raise prices as a result of a shortage.
Ethereum’s price performance is still lagging behind some of its competitors, despite the optimistic feeling among holders. Numerous variables, such as market cycles and the overall state of the economy impacting risk assets, might be to blame for this.
The bright side is that Ethereum’s Layer 2 networks are gaining popularity. Ethereum’s usability is being improved by the increased activity and scaling solutions provided by these networks, which may function as catalysts for further growth. Ethereum’s capacity to manage more transaction volume, lower costs, and enhance user experience overall depends on the emergence of Layer 2 solutions.
