Ethereum's year-to-date growth is behind Bitcoin and other mainstream coins, but several analysts believe that 2025 will be Ethereum's year, listing three major reasons: improved U.S. regulatory environment, Pectra upgrade, and thriving developments in stablecoins, tokenization, and AI agents, suggesting the ETH/BTC exchange rate will return to an upward trajectory.
Year-to-date, Ethereum's performance has lagged behind most mainstream cryptocurrencies, only increasing by 52.8%, lower than Bitcoin's 127.7%, SOL's 80.7%, and XRP's 273.3%.
However, several analysts remain bullish on Ethereum, forecasting that with the improvement of the regulatory environment, significant network upgrades, and the thriving development of mainstream narratives like stablecoins and RWA, next year will be Ethereum's year.
An improved regulatory environment is beneficial for DeFi and DePIN.
Trump successfully elected as President of the United States, due to his repeated promises of being friendly towards cryptocurrency during the campaign, combined with his family's establishment of DeFi projects and the nomination of several pro-cryptocurrency individuals to key government positions such as SEC chairman, the market has high expectations for the improvement of the cryptocurrency regulatory environment after he takes office.
Saul Rejwan, Managing Partner at crypto venture capital firm Masterkey, stated:
The Trump administration and a more friendly SEC will benefit Ethereum and more 'compliant' cryptocurrency projects, especially in the DeFi and DePIN fields.
He pointed out: 'In a more friendly regulatory environment, DeFi projects on Ethereum will flourish, and sectors like restaking can attract a large number of institutional investors with just a bit of regulatory support.'
He added that he expects the new leadership to lower market entry barriers, creating a more favorable environment for innovation and growth for early crypto entrepreneurs and resilient businesses.
Pectra upgrade improves user experience.
At the same time, a major upgrade that Ethereum supporters are looking forward to is the Pectra upgrade. Gaia Regis, co-founder and CEO of the restaking platform Byzantine, stated that the Pectra upgrade will fundamentally change the way the security layer of Ethereum operates.
She pointed out that the current driving force behind Ethereum staking mainly comes from liquidity demand. Essentially, many ETH holders want to participate in staking. This is generally a good thing, as more nodes mean more decentralization and higher security. However, Ethereum's scale is already very large—communication among over a million validators is beginning to slow down network operation.
The solution proposed by Pectra is to increase the maximum effective balance of validators from 32 ETH to 2,048 ETH, which will significantly reduce the number of required validators, thereby alleviating network pressure.
Reduced pressure means faster network operation, providing a better experience for Ethereum users.
She added: 'This improvement will lower the cost of participation in staking, attracting more people to join staking, but it will also decrease staking returns over time. Therefore, we are very optimistic about restaking. Many people will want to enhance their staking returns by simultaneously protecting other networks.'
Kain Warwick, founder of Infinex, stated that the user experience improvements brought by Ethereum improvement proposals and network upgrades will be a key turning point for the future price trends of Ethereum and ETH.
By 2025, I believe that account abstraction technology will advance further, L2 interoperability will significantly improve, and user experiences between L2s will see substantial enhancements.
Stablecoins, tokenization, and AI agents are thriving.
Matt Houghan, Chief Investment Officer at Bitwise, stated that Ethereum possesses three major advantages as it moves toward 2025 and expects the asset to thrive in the new year.
Ethereum is at the core of shaping three major trends in the 2025 cryptocurrency market: stablecoins, tokenization, and AI agents. Ethereum holds a dominant market share in all three areas.
He added:
I believe that the heat generated by these three areas will influence ETH, making it the 'comeback star' of 2025. You can already see hints from the recent strong performance and net inflows of ETF funds.
Nate Geraci, president of ETF Store, also tweeted on December 20 that net inflows for Ethereum ETFs have already matched those of gold ETFs, and he anticipates that inflows will start to accelerate.
ETH performance will surpass Bitcoin.
Looking ahead to Ethereum's future. Michael van de Poppe, founder of MN Capital, stated in a post yesterday (the 24th): 'I would not be surprised if the $ETH / $BTC exchange rate breaks 0.04 in January.' He anticipates:
In January 2025, funds will flow more into Ethereum, while Bitcoin may face outflows, resulting in a consolidation phase for Bitcoin's price. This situation could ignite a 'bull market for altcoins within the Ethereum ecosystem.'
This view aligns with Benjamin Cowen, founder of Into The Cryptoverse, who mentioned in a post on December 4 that he believes 'the decline in the ETH/BTC exchange rate has ended or is nearing its end, and we should see an upward trend in the next 6 to 12 months.'
As of the time of writing, the ETH/BTC exchange rate is reported at 0.03549, up 0.31% in the last 24 hours.
