Ethereum (ETH), the world’s second-largest cryptocurrency by market capitalization, has once again come under scrutiny as the Ethereum Foundation (EF) continues its periodic sales of ETH from its reserves. These moves have sparked debate among investors about the long-term sustainability of EF's funding model and the future trajectory of the Ethereum network.
While Bitcoin (BTC) has soared past its previous all-time highs—reaching over $73,000 in March 2025—Ethereum has struggled to break through its 2021 peak of approximately $4,800. The current high for this bull cycle was around $4,000 in March 2025, and as of now, ETH is trading near $2,400—a 40% drop from its recent high. Compared to many altcoins that have seen drawdowns exceeding 70%, Ethereum’s price resilience is relatively strong. However, given its foundational role in smart contracts and decentralized applications, expectations remain high, and the underperformance relative to BTC has left many holders disappointed.
👉 Discover how Ethereum’s next upgrade could reshape the crypto landscape.
Ethereum Foundation’s Role and ETH Sales
The Ethereum Foundation is a non-profit organization dedicated to supporting the development and adoption of Ethereum and related technologies. Its primary mission includes funding research, developer tools, security audits, and community-driven innovation across the ecosystem.
Because EF operates as a funding body rather than a revenue-generating entity, it must periodically liquidate portions of its ETH holdings to cover operational expenses. In 2024 alone, there were at least six notable instances where large volumes of ETH were moved from EF wallets to exchanges—most notably a sale of 35,000 ETH on August 24.
Historically, these sales often coincide with short-term price declines or occur near local price peaks, leading some observers to jokingly suggest that the foundation “has perfect market timing.” While such claims are anecdotal, they highlight market sensitivity to whale movements and centralized selling pressure.
For long-term ETH holders, these sales can be unsettling. Despite being part of a legitimate funding strategy, repeated disposals may be interpreted as bearish sentiment from within the core ecosystem—potentially eroding confidence and amplifying downward price momentum during already weak market conditions.
Funding Longevity: Is the Ethereum Foundation Running Out?
A key concern among the community is whether the Ethereum Foundation will eventually deplete its reserves. With ongoing sales, some wonder: How long can EF sustain its operations without ETH funding?
According to Justin Drake, a core researcher at the Ethereum Foundation, EF currently operates on an annual budget of roughly $100 million. At current ETH prices, the foundation holds an estimated $650 million worth of ETH in its treasury. This suggests a runway of approximately 10 years based on existing spending levels—assuming no increase in costs or decrease in asset value.
This buffer provides a degree of financial stability and indicates that EF is not in immediate danger of running out of funds. Moreover, future revenue streams such as grants, partnerships, and potential income from protocol-level innovations could further extend this timeline.
Still, transparency around wallet activity remains critical. As more eyes monitor EF’s on-chain movements, clear communication about fund usage and strategic goals will be essential to maintaining trust.
Market Reaction to Spot Ethereum ETF Approval
On July 23, 2025, the U.S. Securities and Exchange Commission (SEC) approved nine spot Ethereum ETFs—a milestone widely seen as legitimizing ETH within traditional finance. The first-day trading volume exceeded $1 billion, echoing the enthusiasm seen after Bitcoin’s ETF approval.
However, unlike Bitcoin—which rallied for two consecutive months following its ETF greenlight—Ethereum failed to gain sustained upward momentum. Instead, spot ETFs have experienced net outflows, contributing to downward price pressure.
Several factors explain this divergence:
- Broader market downturn: The entire crypto market entered a correction phase in mid-2025.
- Lack of narrative catalysts: Unlike previous cycles fueled by ICOs or DeFi mania, this bull run lacks a defining Ethereum-native innovation wave.
- Increased competition: Alternative Layer 1 blockchains like Solana offer faster transactions and lower fees, attracting new projects in AI and DePIN sectors.
Innovation Gap and Ecosystem Challenges
Ethereum has historically led major crypto innovation waves:
- 2017 ICO Boom: Enabled thousands of token launches via ERC-20 standard.
- 2020 DeFi Summer: Gave rise to Uniswap, Aave, Compound, and Synthetix—cornerstones of decentralized finance.
In contrast, the current cycle lacks a similarly transformative use case anchored on Ethereum. Critics like Zhu Su argue that the Ethereum Foundation has failed to deliver a coherent roadmap or decisive leadership in guiding the ecosystem forward.
Additionally, user experience challenges persist:
- High gas fees during peak times (though less frequent now)
- Slower transaction finality compared to competitors
- Growing migration of developers and users to Layer 2 solutions and rival L1s
👉 See how emerging upgrades aim to solve Ethereum’s scalability issues.
The Road Ahead: Pectra Upgrade and Layer 2 Growth
Despite short-term headwinds, Ethereum’s long-term outlook isn’t without promise. The upcoming Pectra upgrade, expected in Q1 2025 (with market speculation likely starting in late 2024), represents a major milestone. It will merge two critical updates:
- Prague (Execution Layer)
- Electra (Consensus Layer)
Potential improvements include:
- Enhanced account abstraction
- Better validator efficiency
- Improved cross-layer interoperability
These upgrades could reinvigorate developer interest and lay the groundwork for a new wave of dApps focused on identity, privacy, and enterprise adoption.
Moreover, Layer 2 networks like Arbitrum, Optimism, and zkSync continue to scale Ethereum’s capacity off-chain while preserving security. Combined, they now process more daily transactions than the Ethereum mainnet—signaling a shift toward a modular blockchain architecture where Ethereum serves as the settlement layer.
Frequently Asked Questions (FAQ)
Q: Why does the Ethereum Foundation sell ETH?
A: The EF sells ETH to fund development initiatives, research grants, security audits, and ecosystem support programs. As a non-profit with no direct revenue stream, it relies on asset liquidation for operations.
Q: Is Ethereum losing relevance to other blockchains?
A: While competitors like Solana attract attention for speed and cost-efficiency, Ethereum remains dominant in total value locked (TVL), developer activity, and institutional adoption. Its shift toward Layer 2 scaling helps maintain competitiveness.
Q: Will the Pectra upgrade boost ETH’s price?
A: Historically, major upgrades have preceded price rallies due to renewed investor interest. While not guaranteed, Pectra could catalyze speculative activity if it delivers meaningful technical improvements.
Q: Are spot Ethereum ETFs failing?
A: Early net outflows don’t necessarily indicate failure. Market conditions and macroeconomic factors play a role. Over time, ETFs may stabilize as institutional demand grows.
Q: Can Ethereum regain its innovation leadership?
A: Yes—especially if upcoming upgrades unlock new use cases in account abstraction, decentralized identity, or AI integration. Strong developer momentum suggests potential for resurgence.
👉 Stay ahead with real-time insights on Ethereum’s next big upgrade cycle.
Conclusion
While short-term pressures—including foundation sales, ETF outflows, and competitive threats—have weighed on Ethereum’s price performance, the network retains strong fundamentals. With a decade-long funding runway for the Ethereum Foundation and a major upgrade on the horizon, ETH still holds significant long-term potential.
The key challenge lies in reigniting narrative momentum and delivering user-centric innovations that capture global imagination—just as it did during the ICO and DeFi revolutions.
For investors and builders alike, patience—and close monitoring of the Pectra upgrade—may prove rewarding in the years ahead.