Author: 1912212.eth, Foresight News
In 2024, for investors holding Ethereum, it has been a rollercoaster ride of ups and downs, with no sweet moments. In terms of return multiples, it not only significantly underperformed Bitcoin but also fell short in comparison to other public chain tracks. Solana has already set a historical high, achieving over 20 times returns from the bottom, and SUI skyrocketed from $0.5 to around $5, yielding nearly 10 times returns.
Ethereum has faced significant skepticism this year, with a weak ecosystem. Compared to the previous period of DeFi and NFT prosperity, this round of innovation has shown mediocre performance, which is reflected in the coin price. So, will 2025 be the year of Ethereum's comeback?
Net inflow of Ethereum spot ETF
After the U.S. Ethereum spot ETF was formally approved in mid-2024, the market initially did not respond positively, coinciding with a relatively sluggish market trend, resulting in significant negative inflows.
After three months of stagnation, influenced by a recovering market trend, Ethereum finally began to see significant inflows at the beginning of November, with net inflow funds consistently far exceeding net outflow funds.
At the end of November, its Ethereum spot ETF even experienced a rare 18-day consecutive net inflow, with the highest single-day net inflow exceeding $400 million at one point. Adjusted for market capitalization, this is equivalent to nearly $1.2 billion in daily capital 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, aligning with the new fiscal year that U.S. mutual funds typically start on December 1, and also reflects the market's optimistic expectations for 2025. If this demand continues, Ethereum's price in 2025 could rise significantly.
As of the time of writing, the total net inflow of the Ethereum spot ETF has reached $2.64 billion.
Ethereum has shown impressive performance in Q1 over the past few years.
In the past eight years, Ethereum has achieved a price increase in Q1 for six of those years. Especially in the first quarter of the year following the U.S. elections, such as in 2017 and 2021, Ethereum achieved quarterly gains 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.
Ethereum's price performance often resonates with the market, particularly in Q1 when the market generally performs well, benefiting from factors such as DeFi and liquidity.
Long-term holders of ETH continue to accumulate.
Observing the dynamics of long-term holders is one of the ways to gain insight into the market. A continuous and significant reduction in long-term holders often indicates that the price is approaching its peak, while during significant price declines or when the future outlook is favorable, long-term holders often increase their holdings, buying low and selling high, in a cycle.
The data in the chart below shows that long-term holders of BTC are continuously reducing their holdings, possibly indicating that some long-term investors believe the psychological target price has reached their profit-taking zone. In contrast, the data for Ethereum is relatively optimistic, rising from a total proportion of less than 60% in the middle of the year to over 80%, with a slight recent decline.
From the chart data, it can be seen that there are currently no significant returns on Bitcoin above $100,000, but long-term holders in the market believe that Ethereum still has good opportunities next year.
Staking and restaking data remain stable and on an upward trend.
Ethereum staking and restaking 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 restaking data, after explosive growth at the beginning of the year, it entered a stable period and remained above 4 million ETH.
The Ethereum spot ETF is expected to support staking.
Currently, the market only trades through the Ethereum spot ETF, which does not support staking rewards, but the future 'Ethereum ETF staking' may potentially be launched. For investors in the Ethereum spot ETF, holding ETH through the ETF means missing out on staking yields, and they also have to pay the ETF issuer a management fee 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 is likely to be reconsidered. Unlike last time, when these measures were virtually zero under Chair Gary Gensler's leadership, Hester Peirce is optimistic about the possibilities 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 if it will happen.
It is foreseeable that once the Ethereum spot ETF supports staking for yields, it will have a positive impact on the price of Ethereum.
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 competition from Solana and Sui. Ethereum needs to consider whether its core narrative positioning is still accepted and recognized by the public.
