Ethereum, one of the most prominent cryptocurrencies, has faced significant challenges over recent years. Yet, as we enter the second half of the year, there are growing signs within the Ethereum community and development team that the asset might be gearing up for a surprising comeback. This optimism is not merely about short-term price fluctuations but is rooted in deeper, internal developments and changes.
Ethereum’s Struggles So Far
Ethereum has undoubtedly been a major disappointment this cycle. Unlike Bitcoin, which has surged impressively from around $40,000 to over $110,000 in early 2024, Ethereum has largely remained stagnant. When comparing Ethereum to its main competitor Solana, Ethereum has also lost ground, raising questions about whether Ethereum can ever return to its prior all-time highs of $4,000 or even $10,000. The underperformance is reflected clearly in its price and market trends. Over the last two to three years, Ethereum has struggled to maintain value relative to Bitcoin, as seen in various charts comparing the two. While Bitcoin has had robust growth, Ethereum has not mirrored this success, which understandably concerns many investors.
What Are the Positives Supporting Ethereum?
Despite these issues, several intrinsic factors position Ethereum uniquely and favorably in the long run:
- Established and Trusted Network: Ethereum is the oldest programmable blockchain network after Bitcoin. It holds a robust reputation for security and reliability forged through years of testing and vetting.
- Largest Developer Community: Ethereum boasts the biggest number of developers working on its platform. The Solidity programming language and Ethereum Virtual Machine (EVM) are well-established and widely adopted, ensuring continuous innovation and improvements.
- High Staking Value and Security: With over $60 billion in staked value, Ethereum ranks highest in securing participant deposits. This pool of investment underpins the network’s resilience and trustworthiness.
- Dominance in Total Value Locked (TVL): Ethereum holds more than 50% of the total capital locked across all smart contract blockchains combined, reflecting massive faith among users and institutional investors in its ecosystem.
- Ecosystem Innovation: Thanks to its sizeable developer base and mature infrastructure, Ethereum remains a fertile ground for new decentralized applications (dApps) and innovations, helping it maintain the leader status in smart contract platforms.
Why Has Ethereum Struggled Against Bitcoin and Competitors?
Ethereum’s disappointing performance relative to Bitcoin and platforms like Solana isn’t accidental or without reason. Several factors have contributed:
- Lack of Institutional Demand: Over the past few years, Ethereum has seen much weaker demand from institutional players compared to Bitcoin, as evidenced by limited inflows via ETFs and other investment vehicles.
- Competition from Other Blockchains: Newer blockchains with faster transaction speeds and lower fees have attracted some of the developer and investor attention away from Ethereum.
- Development and Upgrade Delays: Although Ethereum has planned significant upgrades (e.g., The Merge), delays and uncertainties have dampened investor sentiment.
Emerging Signals of Change and Hope
Recently, internal signals from the Ethereum team and development community have turned more positive, signaling potential shifts:
- Progress on Key Upgrades: Continued development toward Ethereum 2.0 and scaling solutions like rollups are promising to solve long-standing scalability and fee issues.
- Renewed Developer and User Engagement: The ecosystem is seeing a resurgence in developer involvement and project launches, hinting at a more vibrant network.
- Improved Network Metrics: The total value locked (TVL) on Ethereum is inching back toward previous highs, suggesting renewed confidence and capital inflow.
- Relative Performance Gains: Some recent movements in price charts show Ethereum slightly outperforming Bitcoin, potentially signaling the start of a recovery phase.
Conclusion: Should Investors Consider Ethereum Now?
Ethereum remains a foundational pillar of the broader crypto economy thanks to its unmatched developer ecosystem, security, and vast adoption. Even though it has been disappointing recently, these internal positive signals and ongoing improvements suggest it could stage a comeback.
For investors, understanding both the historical challenges and emerging opportunities in Ethereum is crucial. This nuanced outlook can help determine whether to hold, buy, or reconsider Ethereum in their portfolio. While the future is never certain in crypto, Ethereum’s resilience and ongoing innovation continue to make it a compelling asset to watch closely in the months ahead.
By Wolfy Wealth - Empowering crypto investors since 2016
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