Written by: 1912212.eth, Foresight News.
In 2024, investors holding Ethereum have experienced all kinds of ups and downs, but there has been no sweetness. In terms of return multiples, not only has it significantly underperformed Bitcoin, but it has also fared poorly compared to other public chains. Solana has already reached an all-time high, with over 20 times returns from the bottom, while SUI has skyrocketed from $0.5 to nearly $5, providing returns of nearly 10 times.
This year, Ethereum has faced significant scrutiny, with a weak ecosystem compared to the previous cycle's DeFi and NFT boom. The current innovation has performed moderately, which is reflected in the coin price. Will 2025 be the year of Ethereum's resurgence?
Net inflow of Ethereum's spot ETF.
After the U.S. Ethereum spot ETF was officially approved in mid-2024, the market initially did not respond positively, as the market was relatively sluggish, resulting in substantial negative fund inflows.
After a 3-month period of stagnation, influenced by a recovery in the overall market, Ethereum finally began to show significant inflows in early 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 the highest single-day net inflow exceeding $400 million. Adjusted for market capitalization, this is equivalent to nearly $1.2 billion in daily inflows for Bitcoin, since Ethereum's market cap is about a quarter of Bitcoin's. This capital flow may reflect a readjustment or expansion of investment direction, coinciding with the new fiscal year that U.S. mutual funds typically start 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.
Ethereum has performed brightly in Q1 over the past few years.
In the performance of Ethereum in the first quarter over the past 8 years, it has risen in 6 of those years. Especially in the first quarter of the new year following the U.S. elections, for example in 2017 and 2021, Ethereum achieved quarterly increases of 518.14% and 160.7%, respectively.
The cryptocurrency market often possesses self-fulfilling prophecies. If history repeats itself, Ethereum's performance in Q1 this year may once again attract market attention.
Ethereum's price performance often resonates with the market. In Q1, when the market generally performs well, it often benefits from factors such as DeFi and liquidity to achieve an increase.
Long-term holders of ETH continue to increase their holdings.
Observing the dynamics of long-term holders is one way to gain insights into the market. Significant reductions in long-term holders' holdings often indicate that the price is nearing a peak, while during significant price declines or when optimistic about future trends, long-term holders tend to increase their holdings, engaging in a cycle of high selling and low buying.
The data in the chart below shows that long-term holders of BTC are continually reducing their holdings, possibly indicating that some long-term investors believe the price has reached their profit-taking zone. In contrast, Ethereum's data is relatively optimistic, rising from a total proportion of less than 60% mid-year to over 80%, with some recent pullback.
From the chart data, it can be seen that there are currently no significant returns for Bitcoin priced over $100,000, 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's staking and re-staking data can also serve as an indicator of market confidence.
Ethereum's staking volume rose 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 maintained above 4 million ETH.
Ethereum's spot ETF is expected to support staking.
Currently, the market only trades through Ethereum's spot ETF and does not support staking yields; however, in the future, 'Ethereum ETF staking' may be possible. For investors in the Ethereum spot ETF, holding ETH through the ETF means missing out on staking yields, and additionally, they must pay management fees to the ETF issuer ranging from 0.15% to 2.5%.
SEC Commissioner Hester Peirce recently indicated that the possibility of physical redemption and the initiation of staking for Ethereum ETFs may be reconsidered. Unlike last time, when under Chairman Gary Gensler, the implementation of these two measures was almost zero, Hester Peirce expresses optimism about the likelihood of these changes under the new management.
Cynthia Lo Bessette, head of Fidelity's digital asset management department, also stated in an interview that the launch of Ethereum ETF staking is just a matter of time, not a question of whether it will happen.
It can be anticipated that once the Ethereum spot ETF supports staking for yield, it will have a positive 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 and recognized by the public.
