Article reproduced from: Foresight News
Written by: 1912212.eth, Foresight News
In 2024, for investors holding Ethereum, it can be said that they have tasted all the bitterness and sourness, with nothing sweet. In terms of return multiples, not only did it significantly underperform Bitcoin, but it also fell short compared to other public chain tracks. Solana has already set a historical high, with over 20 times return from the bottom, while SUI skyrocketed from 0.5 USD to nearly 5 USD, achieving almost 10 times return.
Ethereum has faced scrutiny this year, with a lack of vitality in its ecosystem. Compared to the prosperity of DeFi and NFTs in the previous cycle, the current round of innovation has performed modestly, which is reflected in the coin price. So, will 2025 be the turnaround year for Ethereum?
Ethereum spot ETF net inflow
The U.S. Ethereum spot ETF was officially approved suddenly in mid-2024, but the market initially did not respond positively, as the market was relatively sluggish, resulting in significant negative inflows.
After experiencing three months of stagnation, influenced by factors such as the market rebound, Ethereum finally began to show significant inflows at the beginning of November, with net inflows consistently far exceeding net outflows.
At the end of November, its Ethereum spot ETF even experienced a rare 18-day continuous net inflow, with a single-day net inflow exceeding 400 million USD at one point. Adjusted for market capitalization, this is equivalent to nearly 1.2 billion USD of funds flowing into Bitcoin daily, as Ethereum's market capitalization is about one-fourth of Bitcoin's. This flow of funds may reflect a reallocation or expansion of investment direction, coinciding with the new fiscal year typically starting for U.S. mutual funds on December 1, while also reflecting the market's optimistic expectations for 2025. If this demand continues, the price of Ethereum in 2025 may rise significantly.
As of the time of writing, the total net inflow of the Ethereum spot ETF has reached 2.64 billion USD.
Ethereum's performance in Q1 over the past few years has been impressive.
In the performance of Ethereum in the first quarter over the past 8 years, there have been 6 years of increases. Especially in the first quarter of the new year after the U.S. elections, for example, in 2017 and 2021, Ethereum achieved quarterly gains of 518.14% and 160.7%, respectively.
The cryptocurrency market often has self-fulfilling prophecies. If history repeats itself, Ethereum's performance in this year's Q1 may again attract market attention.
The price performance of Ethereum often resonates with the market. In Q1, when the market generally performs well, it often benefits from factors such as DeFi and liquidity to rise.
Long-term holders of ETH are still increasing their holdings.
Observing the dynamics of long-term holders is one of the ways to gain insight into the market. When long-term holders are continuously reducing their holdings, it often indicates that the coin price is approaching its peak. However, when the price experiences a significant decline or is optimistic about future trends, long-term holders often increase their holdings, engaging in high selling and low buying, resulting in a cyclic pattern.
The data in the figure below shows that long-term Bitcoin holders are continuously reducing their holdings, which may indicate that some long-term investors have reached their profit-taking zone. In contrast, Ethereum's data is relatively optimistic, rising from a total proportion of less than 60% at mid-year to over 80% at its peak, currently showing some pullback.
From the chart data, it can be seen that there are currently no significant returns for Bitcoin above 100,000 USD, but long-term holders in the market believe that Ethereum will still have good opportunities next year.
Staking and re-staking data remain stable and upward.
Ethereum staking and re-staking data can also serve as indicators to observe market confidence.
The staking volume of Ethereum 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 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 yields. However, in the future, 'Ethereum ETF staking' may be possible. For investors in the Ethereum spot ETF, holding ETH through the ETF currently means missing out on staking yields, and they also have to pay a management fee of 0.15% to 2.5% to the ETF issuer.
SEC Commissioner Hester Peirce recently stated that the possibility of physical redemption and Ethereum ETF starting staking is likely to be reconsidered. Unlike last time, when the realization of these two measures was nearly zero under the leadership of Chairman Gary Gensler, Hester Peirce is optimistic about the possibility of these changes under the new management.
Cynthia Lo Bessette, head of Fidelity Digital Asset Management, also stated in an interview that the launch of Ethereum ETF staking is just a matter of time, not whether it will happen.
It is foreseeable that once the Ethereum spot ETF supports staking and earning interest, 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 the activity level of its ecosystem is sluggish in 2024, with trading volume stagnant and facing strong challenges from Solana and Sui. Ethereum needs to consider whether its core narrative positioning is still accepted by the public.
