In the current bull market, is Ethereum not doing well?
The above picture shows the difference in the growth of Bitcoin and Ethereum this year, BTC is 282.7%, ETH is 103.57%
I believe that many cryptocurrency traders have long been complaining about the half-dead market of Ethereum. From the beginning of the year to now, Bitcoin, as the leader, has taken the lead and has achieved a nearly 3-fold increase. As a trustworthy target in the crypto market, the performance is quite impressive. On the other hand, Ethereum, the second-largest cryptocurrency, seems to have increased by less than 1 times, and it has not even reached the previous high of 4868. What happened to Ethereum? Is it really going to fail?
In this article, we analyze on-chain data and various cash flows to determine whether Ether has truly been abandoned by the market or if it is simply yet to explode. The following viewpoints are for reference only and do not constitute investment advice.
Ethereum's performance this year - crossing the $4000 mark
From a price perspective, Ethereum has been oscillating widely between $4000 and $2000 this year. Following Bitcoin's surge to around $4000 in March, it has been adjusting through fluctuations. Although the market was bullish in May due to the SEC accepting the 19b-4 application for ETFs, the momentum did not sustain. In fact, after the ETF officially launched on July 23, the market experienced a 'Sell the News' phenomenon. Subsequently, a large-scale sell-off by Jump Trading caused Ethereum's price to quickly drop to around $2100, erasing all gains from the first half of the year.
After Trump confirmed his election in November, the crypto market celebrated, with Ethereum also returning to the $4000 mark. However, it is still 20% away from the previous high of $4868. Meanwhile, mainstream cryptocurrencies like BTC, SOL, and BNB have all surpassed previous highs, achieving price increases of 150%, 120%, and 140%, respectively, since the beginning of the year. The total market capitalization of the crypto market has skyrocketed from $1.8 trillion to $3.8 trillion, a growth rate of 110%, while ETH has only achieved a 66% increase, underperforming the broader market.
Ethereum's performance this year has indeed been somewhat disappointing, but the key question is whether Ethereum still has the opportunity to explode or if it has already reached its peak, marking the end of an era of Ethereum dominance. We will analyze this from various perspectives.
ETH on-chain activity and income
As the king of public chains, on-chain activity, revenue, and TVL (Total Value Locked) have always been the focus of the market. Firstly, regarding the number of active addresses on-chain, the average this year has been around 400,000 to 600,000, which is comparable to the period from 2021 to 2023, showing little growth. More active addresses are concentrated in Layer2 solutions, especially on Base and Arbitrum.
In terms of on-chain activity, the daily transaction count falls between 1.1 to 1.3 million. This data has been maintained within this range since the bull market of 2021, showing little growth.
After Ethereum upgraded to the POS mechanism, on-chain revenue has decreased significantly, yet we can still analyze on-chain activity from this data. Compared to 2023, there is a noticeable increase, but the increase is mainly in staking income rather than transaction fees, indicating that on-chain activity has not grown; rather, there is an increase in the number of stakers and the amount of staked Ether.
ETH on-chain asset status
The standout performer in the data is TVL. Among numerous public chains, Ethereum has the highest asset accumulation, currently standing at $72.7 billion, which is double compared to over $30 billion in December 2023, maintaining its top position, while the second place, Solana, only has $8.8 billion, showing a significant gap.
In the past two years, the staking ratio of Ethereum has gradually increased, with nearly 30% of Ether now staked on-chain. Most of this is to maintain the security of Ethereum while earning on-chain returns.
According to on-chain statistics from Dune, approximately 34.5 million Ether are currently staked, with over a million validation nodes. Ethereum remains the most secure blockchain network outside of the BTC mainnet.
Current status of ETH ETFs: Continued inflows following Trump's election.
Next, let's look at the inflow and outflow situation of ETH ETFs. According to data from Sosovalue, as of the time of writing, ETH ETFs have accumulated inflows of $2.46 billion this year. It is evident that most of the inflows have concentrated after November, following Trump's election victory, where American institutions and investors confirmed political trends to some extent and indeed considered incorporating ETH into their asset allocation. This is undoubtedly a positive trend.
There have been 18 consecutive days of net inflows, with 9 days exceeding $100 million in single-day inflows.
ETH holding situation: Continuous inflows into whale addresses.
It is noteworthy that, according to the addresses holding coins, those holding more than 100 ETH have been continuously flowing in. After the ETF was approved and launched, the largest inflow situation in history began to appear. Recently, following Trump's election, there has been a surge in large inflows, with most transaction prices falling above $3000, indicating that these whales do not consider Ethereum's current price to be high, but rather keep buying, seemingly suggesting that Ethereum's price will continue to rise in the future.
Looking at the addresses holding Ether, those holding less than 100 Ether have been decreasing recently after the price hike, possibly indicating that retail investors are continuously selling their Ether. In contrast, the addresses holding more than 100 Ether have been increasing. From these charts, we can understand the current market direction: although we are in a bull market, there is completely no FOMO sentiment in the market, and many believe that ETH's price has reached relatively high levels.
Recent ETH market news - AI Agent, RWA, NFT, and DeFi sectors have all seen consecutive explosions.
Interestingly, the recent hot news is all about Ether. Firstly, the narrative surrounding AI agents has taken center stage in what is a booming year for AI. The crypto market is certainly a focal point, and the main hotspots we observe are fermenting on Ethereum's Layer2 Base and Solana, with applications primarily centered around Base, indicating that the development of the Ethereum ecosystem still holds great potential.
Another hot topic is Trump's crypto-friendly policies. His family's DeFi project, World Liberty Financial, has recently been actively buying DeFi-related assets, including tokens like Link, Ondo, Aave, and Ena, among which are mainstream Ethereum protocols and emerging RWA protocols. According to Arkham data, the largest asset held in their wallet is Ether, suggesting that the Trump family also recognizes the development potential of Ethereum's DeFi sector.
The RWA sector is at the forefront, with the recent Usual Protocol going live on Binance, doubling in value on the first day of trading. Following the announcement of high staking rewards and collaboration with Ethena, USDtb will become the main collateral asset for USD0. After these news, the locked funds on-chain also surpassed $1 billion, making it arguably the brightest star in the EVM ecosystem recently.
Lastly, the recent market hot topic is the long-quiet NFT market, where both transaction volume and floor prices have surged significantly, especially among leading projects on Ethereum.
Among the most popular NFT projects, Pudgy Penguins has increased by over 200% compared to six months ago, with the floor price rapidly rebounding before the $PENGU TGE, reaching an astonishing price of 35 ETH, exceeding $130,000, even temporarily surpassing the floor price of BAYC. Other projects are also performing well, with Cryptopunks increasing by 70% over six months and BAYC by 100%, indicating that the Ethereum market is still quite hot, with significant capital flowing on-chain.
In summary, amidst the waves of a bull market, Ethereum seems to be undergoing a transformation in concept and value. Unlike the fervent expansion seen in previous bull markets, Ethereum is currently demonstrating a cautious and poised demeanor. Observing on-chain data, we indeed find that developers are gradually shifting their focus towards Layer2 solutions like Base and Arbitrum. This migration does not indicate Ethereum's failure but rather confirms the developmental path its ecosystem must take, similar to how BTC gave rise to various blockchain ecosystems. However, don't forget that its value has already been recognized by the market.
Another noteworthy point is the continuous rise in Ethereum's TVL and the increasing values in DeFi and NFT markets, indicating that Ether is quietly transforming into one of the main 'value storage assets' in the crypto world. More and more investors and institutions are choosing to hold Ether long-term, resembling the holding patterns of Bitcoin. This behavior also represents a deepening trust in Ethereum by the market, and even if its token performance is not as good as the broader market, it has not shaken the confidence of long-term holders.
In terms of market performance, although the initial reaction to the ETF approval was exciting, the weak trend between July and October indeed led many to question the importance of ETH ETFs. However, the strong capital inflows since November, especially the unusual movements of whale wallets, have injected new imagination into the market, seemingly suggesting that Ethereum has not been forgotten by the market but is instead potentially brewing a new round of breakthroughs.
