In 2024, investors holding Ethereum have experienced a mix of bitterness and hardship, with no sweetness at all. In terms of return multiples, it not only significantly underperformed Bitcoin but also showed lackluster performance compared to other public chains. Solana has already set a historical high, with over a 20-fold return since the bottom, and SUI has soared from $0.5 to around $5, yielding nearly 10 times.

Ethereum has suffered from doubts this year, with a weak ecosystem. Compared to the previous cycle's DeFi and NFT boom, this round of innovation has performed mediocrely, reflected in its price. Will 2025 be the year of Ethereum's turnaround?

Net inflow of Ethereum spot ETF


After the sudden official approval of the US Ethereum spot ETF in mid-2024, the market initially did not respond positively, as the market conditions were relatively lackluster, resulting in significant negative inflows.

After three months of a downturn, influenced by factors such as the recovery of the overall market, Ethereum finally began to see significant inflows in early November, with net inflows consistently far exceeding net outflows.

By the end of November, its Ethereum spot ETF even saw a rare continuous net inflow for 18 days, with a single-day net inflow exceeding $400 million at one point. Adjusted for market capitalization, this is equivalent to nearly $1.2 billion of daily inflows for Bitcoin, as Ethereum's market capitalization is about a quarter of Bitcoin's. This capital flow may reflect a readjustment in investment direction or an expansion of scope, coinciding with the new fiscal year that US mutual funds typically start on December 1, while also reflecting the market's optimistic expectations for 2025. If this demand persists, Ethereum's price in 2025 may rise significantly.

As of the time of writing, the Ethereum spot ETF has accumulated a total net inflow of $2.64 billion.

Ethereum has shown impressive performance in Q1 over the past few years.

In the past eight years, Ethereum has experienced an increase in six out of the eight first quarters. Especially in the first quarter of the new year following the US 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 performed well, it typically benefited from factors such as DeFi and liquidity, leading to a price increase.

Long-term holders of ETH continue to increase their holdings.

Monitoring the dynamics of long-term holders is one of the means to gain insights into the market. Continuous and substantial reductions in long-term holders often indicate that the coin price is approaching a peak, whereas when prices drop significantly or when they are optimistic about future trends, long-term holders tend to increase their holdings, buying low and selling high in a cyclical manner.

The data in the chart below shows that long-term Bitcoin holders are continuously reducing their holdings, possibly because some long-term investors believe their target price has reached the profit-taking area. In contrast, Ethereum's data appears relatively optimistic, increasing from a total proportion of less than 60% at mid-year to a peak of over 80%, with some decline currently.

From the chart data, it can be seen that Bitcoin priced over $100,000 no longer offers significant returns, but long-term holders in the market believe that Ethereum still has good opportunities next year.

Staking and re-staking data remain stable and on an upward trend.

Ethereum's staking and re-staking data can also serve as indicators of market confidence.

Ethereum's staking volume increased 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, maintaining above 4 million ETH.

Ethereum spot ETFs are expected to support staking.

Currently, the market only trades through Ethereum spot ETFs and does not support staking returns. However, in the future, 'Ethereum ETF staking' may be possible. For investors in Ethereum spot ETFs, holding ETH through ETFs currently means missing out on staking yields and also incurring management fees ranging from 0.15% to 2.5% payable to the ETF issuer.

SEC Commissioner Hester Peirce recently stated that the possibility of considering physical redemptions and staking for Ethereum ETFs is expected to be revisited. Unlike last time, when the chances of implementing these measures were almost zero under Chairman Gary Gensler's leadership, Hester Peirce is optimistic about the potential for changes under the new management.

Cynthia Lo Bessette, head of Fidelity's Digital Asset Management, also stated in an interview that the launch of staking for Ethereum ETFs is just a matter of time, not if it will happen.

It is foreseeable that once Ethereum spot ETFs support staking, it will have a boosting effect on Ethereum's price.