According to analysts and experts, AI agents, a series of crucial network upgrades, and improvements in the US regulatory environment are all reasons for Ethereum fans to look forward to 2025.

Ethereum supporters say that AI entities, significant network upgrades, increased institutional interest, and comprehensive regulatory reforms brought by the new US President Donald Trump’s crypto-friendly government are all reasons to be excited about 2025.

Infinex founder Kain Warwick stated in an interview with Cointelegraph that although Ethereum's performance in 2024 may seem a bit flat, this asset is like a 'compressed spring,' ready for a breakout in 2025.

According to TradingView data, as of now, ETH has accumulated a 53.5% increase this year, rising from $2,350 on January 1 to its current price of $3,478.

Meanwhile, other major crypto assets, including Solana, Cardano, and Ripple's XRP, have risen by 92.7%, 57%, and 276.5% respectively this year.

The longer you press it down, the harder it will bounce back. There are many favorable factors and some constraints, but once it breaks through, people will say 'Oh my God,' said Warwick.

He mentioned several Ethereum Improvement Proposals (EIPs) and the enhancements in user experience brought by these upgrades, believing that these are critical turning points for Ethereum and ETH price trends.

In 2025, I believe we will see improvements in account abstraction, significant progress in L2 interoperability, and a substantial enhancement in user experience between L2s.

Ethereum will welcome the Pectra upgrade in 2025

One of the major upgrades that Warwick and other Ethereum supporters are eagerly anticipating is the Pectra upgrade—this is the next significant milestone on Ethereum's roadmap, expected to launch in early 2025.

Gaia Regis, co-founder and CEO of the restaking platform Byzantine, stated that the Pectra upgrade will fundamentally change the way the Ethereum security layer operates.

Currently, Ethereum staking primarily relies on liquidity. Essentially, many ETH holders want to participate in staking. This is generally a good thing because more nodes mean more decentralization and higher security, she said.

However, Regis stated that Ethereum has now reached a massive scale—communication among over 1 million Ethereum validators—which is starting to slow down the network.

Pectra addresses this issue by increasing the maximum effective balance of validators from 32 ETH to 2,048 ETH, significantly reducing the number of required validators and relieving network pressure, said Regis.

Less pressure means a faster network, and the experience for Ethereum users will also improve.

In September of this year, Ethereum core developers decided to divide the Pectra upgrade into two main packages. The first Pectra package will introduce a total of eight EIPs, the most important of which is EIP-7702, aimed at improving user experience for wallets and chain abstraction.

This will make staking cheaper, leading to more people participating in staking, thereby reducing staking rewards over time. For this reason, we have an extremely optimistic attitude towards restaking. Many will hope to increase their staking rewards by securing other networks.

Trump's crypto-friendly SEC will be particularly beneficial for ETH

Saul Rejwan, managing partner at crypto venture capital firm Masterkey, stated in an interview with Cointelegraph that Ethereum and more 'legitimate' projects in the crypto industry, particularly decentralized finance (DeFi) and decentralized physical infrastructure (DePIN), will benefit the most under the Trump administration and a more crypto-friendly US SEC.

On December 4, Trump nominated pro-crypto businessman and former SEC commissioner Paul Atkins to serve as the next SEC chairman, while current chairman Gary Gensler plans to resign on January 20.

In a more favorable regulatory environment, DeFi projects on Ethereum will thrive, and fields like restaking only need a little regulatory push to attract institutional investors, he said.

We expect this new leadership to lower entry barriers, making it easier for early crypto entrepreneurs and resilient companies to innovate and succeed.

Stablecoins, tokenization, and AI agents

Matt Houghan, Chief Investment Officer of Bitwise, stated that Ethereum enters 2025 with three significant advantages and expects this asset to experience a breakout in the new year.

Ethereum is at the center of the three biggest trends in the crypto industry: the rise of stablecoins, tokenization, and AI entities. It dominates the market share in all three areas, said Houghan.

He added, "I believe that the excitement in these three areas next year will affect Ethereum, making it the comeback king of 2025. You can already see this in the recent strong performance and ETF inflows."

In the past two weeks, Ethereum ETF net inflows reached $1.5 billion, making it one of the largest influx periods among the eight spot funds, according to Farside Investors data.

Like Rejwan, Houghan also believes that the new crypto-friendly SEC under Trump will be particularly beneficial for Ethereum.

I look forward to lifting the 'Sword of Damocles' that has hung over the US crypto industry for the past four years. Washington's new approach will unleash millions of crypto entrepreneurs, many of whom will build killer applications on Ethereum and its Layer 2 networks, said Houghan.

We are entering the golden age of crypto, and Ethereum will be one of the main beneficiaries of this flourishing development.

Houghan stated that overall, Bitwise expects ETH to break through its previous all-time high of $4,878, reaching what he describes as a 'conservative' forecast of a new high of $7,000.

More Layer 2 networks, restaking, and better DApps

Edu Timmers, Chief Marketing Officer of crypto company Keyrock, believes that the release of new Layer 2 networks like Abstract and Deutsche Bank's project will enhance the broad application of the Ethereum ecosystem.

Timmers also mentioned the rise of the on-chain perpetual contract protocol Hyperliquid built on Arbitrum, which proves Ethereum's growing dominance on-chain. He stated that he expects Ethereum and its decentralized applications (DApps) ecosystem to start competing with centralized market leaders like Binance in the new year.

Projects like Hyperliquid will start competing with centralized players like Binance in 2025, rather than decentralized projects like Uniswap, Timmers said.

Additionally, Timmers noted that Ethereum's restaking is another underrated area to watch in 2025, claiming this will make the network more robust and versatile.

As chains begin to shift security to the Ethereum mainnet through solutions like EigenLayer, restaking might see a breakthrough.