Ethereum
3 Reasons Why I Sold Ethereum and Never Looked Back
The coin’s potential took a long time to materialize.
A few weeks ago, I decided to get rid of the vast majority of my Ethereum (ETH 2.23%) after having held and accumulated them over the last few years. I don’t expect to buy more anytime soon, even if the price drops to attractive levels.
Here’s why.
1. The price of the coin has exceeded the target level of my investment plan
The main reason I decided to sell almost all of my Ethereum was that its price was above the level I had identified as a selling point.
I first started accumulating Ethereum in mid-2020. Consistent with my original investment plan, I did not set a price target for a sale at the time, choosing instead to re-evaluate the matter after approximately three years. I continued to Dollar Average Cost (DCA) and I strengthened my position until about mid-2023, after which I set a firmer target and stopped buying more.
I decided to seriously consider selling after the price reached somewhere above $3,000 per token, a level the coin had exceeded in at least three of the periods I had held it , as this graph shows:
Ethereum Price data by Y Charts
When the coin broke through this price level this year, it was only a matter of time. It’s entirely possible that my sale means I’ll miss out on the coin’s future growth. But because of the next reason we’ll discuss, I won’t lose sleep over it.
2. Transaction fees were too high and not improving enough over time
Transaction fees, called gas fees, are still at the top of the Ethereum chain. To make a transaction, you will have to pay between $5 and $80 or more, depending on the day. And despite many repeated promises from the chain’s promoters about permanently lowering gas prices, they have remained stubbornly and painfully high for years.
I don’t trade my cryptocurrencies daily, so it might seem like a stretch to complain about the infrequent transaction costs associated with building a position. But remember, my strategy was to go for average cost. Making a series of purchases meant paying gas fees of around $600 in total – far too much considering the relatively small size of my position and investments.
Additionally, what I noticed again and again over the years of my ownership was that the high fees discouraged my friends from buying Ethereum as an investment or trying to use it to interact with decentralized applications (dApps) And decentralized finance (DeFi) services. Notable commission costs have all but disappeared for most retail investors trading stocks, so people often expect the same to be true for cryptocurrencies.
After a while, I stopped presenting the coin as an investment because I wanted to avoid later conversations about how much gas costs would be. Ultimately, I recognized this behavior in myself, and it was an unambiguous sign that it was time to sell.
3. It’s in the uncanny valley of cryptocurrencies
The final reason I sold Ethereum is that it is currently in a bit of an uncanny valley.
If you’re unfamiliar, the uncanny valley is a phenomenon in which a person’s reaction to a humanoid robot is warm when the robot doesn’t seem very human at all, warm when the robot appears to be entirely human, but ice cold. cold or otherwise negative when the robot appears to look almost human-like, but is clearly not a real human.
Ethereum has a number of coinssuch as Shiba Inu, a blockchain intended largely for fun or outright gaming rather than investing in serious projects and promoting cutting-edge financial technologies. At the same time, it has a handful of rather esoteric and decentralized autonomous organizations (DAO)just as you would expect from a channel devoted to intensive technological development, financial engineering or methodical new experiments in corporate governance.
However, its high transaction costs make investing in the same coins extremely painful. Likewise, the same source of friction is a significant drag on for-profit projects, which tend to have a greater need to transact on demand, meaning they can’t wait for fees to go down .
For other purposes, such as minting and trading non-fungible tokens (NFT) or create smart contracts, there are many solutions to choose from on-chain. But many marketplaces, exchanges, and tools on Ethereum have only rudimentary feature sets or sketchy credentials.
Of course, the Ethereum blockchain itself cannot fully control which projects use it or how they operate.
But for a chain’s native token to be a good investment compared to other options, it helps if there is a critical mass of users within at least one (large) community loyal to the chain. where their projects are deployed. And for this chain, the various frictions are an obstacle to continuing to build this critical mass, so I don’t regret having sold.