Ethereum (ETH) supporters believe that AI agents, major network upgrades, increasing interest from institutions, and a series of regulatory reforms from the upcoming cryptocurrency-friendly administration of U.S. President Donald Trump are highly anticipated factors in 2025.
Infinex founder Kain Warwick shared that while Ethereum may have faced a slight weakening case in 2024, the asset is like a "compressed spring" and ready to explode in 2025.
Ether (ETH) has increased by 53.5% since the beginning of the year, from a price of $2,350 on January 1 to $3,478 at the time of this publication, according to data from TradingView.
ETH has recorded a year-to-date growth of 53.5% | Source: TradingView
Meanwhile, other major cryptocurrencies, including Solana (SOL), Cardano (ADA), and Ripple (XRP), have seen growths of 92.7%, 57%, and 276.5% respectively since the beginning of the year.
"The longer it compresses, the stronger it will bounce back. There are many supporting factors, but also some that hold it back. However, when it explodes, people will say 'Wow'," Warwick said.
He pointed out that several Ethereum Improvement Proposals (EIPs) and improved user experience due to these upgrades are key factors for Ethereum and ETH price volatility in the future.
"By 2025, I think we will see account abstraction improve, L2 interoperability will be greatly enhanced, and user experience across L2s will also be significantly upgraded."
Ethereum will implement the Pectra upgrade in 2025
One of the major upgrades that Warwick and Ethereum enthusiasts are looking forward to is the Pectra upgrade – the next significant milestone in Ethereum's development roadmap, expected to be introduced early in 2025.
Gaia Regis, co-founder and CEO of the Byzantine restaking platform, stated that the Pectra upgrade will fundamentally change how Ethereum's security layer operates.
"Currently, staking on Ethereum is primarily driven by liquidity. Essentially, many ETH holders want to participate in staking. This is usually good because the more nodes there are, the more decentralized and secure it is," she said.
However, Regis noted that the immense scale that Ethereum has achieved now – with communication between over 1 million Ethereum validators – is starting to slow down the network.
"Pectra addresses this issue by increasing the maximum effective balance limit for validators from 32 ETH to 2,048 ETH, which significantly reduces the number of validators needed and thereby eases the burden on the network," Regis said.
"Easing the load means a faster network and Ethereum users will be more satisfied."
In September, Ethereum's core developers decided to split the Pectra upgrade into two main packages. The first Pectra package will introduce a total of eight EIPs, with the most notable being EIP-7702, aimed at improving user experience for wallets and chain abstraction.
"This will make staking cheaper, causing more people to participate in staking and thereby reducing staking rewards over time. For this reason, we are very optimistic about restaking. Many people will want to increase their staking rewards by securing additional networks."
A cryptocurrency-friendly SEC under the Trump administration will be particularly beneficial for ETH
Saul Rejwan, managing partner of the cryptocurrency venture capital firm Masterkey, said that Ethereum and other "legitimate" projects in the cryptocurrency space, particularly decentralized finance (DeFi) and decentralized physical infrastructure (DePIN), will benefit the most from a Trump administration and a cryptocurrency-friendly Securities and Exchange Commission.
On December 4, Trump appointed cryptocurrency-friendly entrepreneur and former SEC Commissioner Paul Atkins as a candidate for the next SEC chair, with current Chairman Gary Gensler expected to resign on January 20.
"DeFi projects on Ethereum will thrive under a more favorable regulatory environment, while areas like restaking just need a slight push from regulations to attract institutional investors," he noted.
"We expect that this new leadership will ease entry barriers and facilitate early-stage cryptocurrency entrepreneurs and resilient companies to innovate and grow."
Stablecoins, tokenization, and AI agents
Bitwise's investment director, Matt Houghan, stated that Ethereum has three key factors driving its growth in 2025 and predicts that the asset will explode in the new year.
"Ethereum is at the center of three major trends shaping cryptocurrency in 2025: the rise of stablecoins, tokenization, and AI agents. It has a dominant market share in all three areas," Houghan said.
The total market capitalization of stablecoins on Ethereum is $110 billion | Source: DefiLlama
"I believe the excitement from these three areas next year will spill over to ETH, making it the 'star' in 2025. You have seen that through its strong recent performance and ETF capital inflow," he added.
In the past two weeks, Ether ETF funds have recorded a net inflow of up to $1.5 billion, one of the largest inflows ever for the eight spot funds, according to data from Farside Investors.
Ethereum ETFs have seen a net inflow of more than $1.5 billion in the recent two weeks of trading | Source: Farside Investors
Like Rejwan, Houghan also believes that a new cryptocurrency-friendly SEC under Trump will provide significant benefits for Ethereum.
"I am very excited to see the removal of the so-called 'Sword of Damocles' that the cryptocurrency industry in the US has endured for the past four years. A new approach in Washington will free millions of startups in the cryptocurrency sector, and many of them will build groundbreaking applications on Ethereum and its layer 2s," Houghan said.
"We are entering a golden age of cryptocurrency, and Ethereum will be one of the main beneficiaries of this development."
Houghan said that, overall, Bitwise forecasts ETH will surpass its previous all-time high of $4,878, reaching a new price he describes as "modest" at $7,000 in the new year.
Multiple layer 2s, restaking, and better DApps
Edu Timmers, an Ethereum supporter and Marketing Director of cryptocurrency firm Keyrock, expects the launch of new layer 2 networks, including Abstract and the Deutsche Bank project, to give a boost to the widespread application of the Ethereum ecosystem.
Timmers also pointed to the recent development of the on-chain perps protocol Hyperliquid, built on Arbitrum, as evidence of Ethereum's increasing dominance on the blockchain platform, while noting that he expects Ethereum and the ecosystem of decentralized applications (DApps) to start competing fairly with centralized market leaders like Binance in the new year.
"Projects like Hyperliquid are starting to compete with centralized rivals like Binance rather than decentralized competitors like Uniswap in 2025," Timmers said.
Additionally, Timmers believes Ethereum restaking is an underappreciated area but worth anticipating in 2025, as it will make the Ethereum network stronger and more resilient.
"Restaking is likely to have a breakthrough as chains begin to transfer security to the Ethereum mainnet through solutions like EigenLayer."
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