Written by: 1912212.eth, Foresight News
In 2024, investors holding Ethereum have tasted all the bitter and sour flavors, but have yet to find sweetness. In terms of return multiples, it not only significantly underperformed Bitcoin but also appears mediocre compared to other public chains. Solana has already set a historical high, exceeding 20 times return from its bottom, while SUI has surged from 0.5 USD to nearly 5 USD, yielding nearly 10 times return.
Ethereum has faced significant skepticism this year, with weak ecology. Compared to the previous cycle's DeFi and NFT boom, this round of innovation has performed mediocrely, and the overall performance is reflected in the coin price. Will 2025 be the year of turnaround for Ethereum?
Net inflow of Ethereum spot ETF
After being officially approved in mid-2024, the U.S. Ethereum spot ETF initially did not gain traction in the market, coinciding with a relatively sluggish market, resulting in significant negative inflows.
After a three-month period of stagnation, influenced by the recovery of the overall market, Ethereum finally began to see significant inflows at the beginning of November, with net inflows consistently far exceeding net outflows.
At the end of November, Ethereum's spot ETF even saw a rare consecutive net inflow for 18 days, with a single-day net inflow exceeding 400 million USD at one point. Adjusted for market capitalization, this is equivalent to nearly 1.2 billion USD in daily inflows for Bitcoin, as Ethereum's market cap is about a quarter of Bitcoin's. This capital flow may reflect a reallocation of investment direction or an expansion of scope, coinciding with the new fiscal year that U.S. mutual funds typically begin on December 1, while also reflecting the market's optimistic expectations for 2025. If this demand continues, Ethereum's price may rise significantly in 2025.
As of the time of writing, Ethereum's spot ETF has accumulated a total net inflow of 2.64 billion USD.
Ethereum has performed brilliantly in Q1 over the past few years.
In the past eight years of Ethereum's performance in Q1, there have been six years of increases. Especially in the first quarter of the new year after the U.S. elections, such as in 2017 and 2021, Ethereum achieved quarterly increases of 518.14% and 160.7%, respectively.
The crypto market often has self-fulfilling prophecies. If history repeats itself, Ethereum's performance in Q1 this year may once again attract market attention.
The price performance of Ethereum often resonates with the market. In Q1, when the market generally performs well, Ethereum often benefits from factors such as DeFi and liquidity, resulting in an increase.
Long-term ETH holders are still increasing their holdings.
Observing the dynamics of long-term holders is one of the means to gain insight into the market. Continuous large-scale reductions by long-term holders often indicate that the coin price is approaching its peak, while during significant price declines or when they are optimistic about future trends, long-term holders tend to increase their holdings, engaging in a cycle of high sell and low buy.
The data in the chart below shows that long-term Bitcoin holders are continuously reducing their holdings, which may indicate that some long-term investors believe their estimated price has reached their profit-taking zone. In contrast, Ethereum's data is relatively optimistic. From a total proportion of less than 60% in the middle of the year, it rose to over 80% at its peak, with some recent decline.
From the chart data, it can be seen that there are currently no significant returns for Bitcoin holdings above 100,000 USD, but long-term holders in the market believe there are still good opportunities for Ethereum next year.
Staking and re-staking data remain stable and on an upward trend.
Ethereum staking and re-staking data can also serve as indicators for observing market confidence.
Ethereum's staking amount has risen from less than 35 million ETH at the beginning of 2024 to 55 million ETH by the end of the year. In terms of re-staking data, after explosive growth at the beginning of the year, it entered a stable period and has remained above 4 million ETH.
Ethereum spot ETF is expected to support staking
Currently, the market only trades Ethereum through spot ETFs, which do not support staking yields. However, in the future, 'Ethereum ETF staking' may possibly be launched. For investors in Ethereum spot ETFs, currently holding ETH through ETFs means missing out on staking yield, and they also need to pay an additional management fee of 0.15% to 2.5% to the ETF issuer.
SEC Commissioner Hester Peirce recently indicated that the possibility of physical redemptions and staking for the Ethereum ETF may be reconsidered. Unlike last time when under Chairman Gary Gensler, the realization of these two measures was almost zero, Hester Peirce is optimistic about the potential changes under the new management.
Cynthia Lo Bessette, head of Fidelity Digital Asset Management, also stated in an interview that the launch of Ethereum ETF staking is just a matter of time, not whether it will happen.
It is foreseeable that once Ethereum’s spot ETF supports staking, it will have a boosting effect on Ethereum's price.
Summary
Although Ethereum is still worth looking forward to, there are also significant challenges to face. Observing its Gas fee data reveals that in 2024, the activity level of its ecosystem is sluggish, trading volume is stagnant, and it faces strong challenges from Solana and Sui. Ethereum needs to consider whether its core narrative positioning is still accepted by the public.
