Written by: 1912212.eth, Foresight News
In 2024, investors holding Ethereum have experienced a mix of bitter and sour, with only the sweet missing. In terms of return multiples, not only has it significantly lagged behind Bitcoin, but it also falls short in comparison to other public chain tracks. Solana has already set a new historical high, with returns exceeding 20 times from the bottom, while SUI has soared from $0.5 to around $5, yielding nearly 10 times.
Ethereum has faced criticism this year, with a lack of vitality in its ecosystem. Compared to the last cycle's DeFi and NFT boom, this round of innovation has performed mediocrely, which is reflected in the coin price. Will 2025 be the year of resurgence for Ethereum?
Net inflow of Ethereum spot ETF.
After the U.S. Ethereum spot ETF was officially approved suddenly in mid-2024, the market initially did not buy into it, as the market was relatively sluggish, resulting in significant negative inflows.
After a 3-month slump, influenced by factors such as the recovery of the market, Ethereum finally began to show significant inflows at the beginning of November, with net inflows consistently far exceeding net outflows.
By the end of November, its Ethereum spot ETF even experienced a rare 18 consecutive days of net inflows, with a single-day net inflow exceeding $400 million at one point. Adjusted for market capitalization, this is equivalent to nearly $1.2 billion in daily 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 range, aligning 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, the price of Ethereum 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 bright performance in Q1 over the past few years.
In the quarterly performance of Ethereum over the past 8 years, it has achieved an increase in 6 of those years. Especially in the first quarter of the new year after the U.S. election, such as in 2017 and 2021, Ethereum achieved quarterly increases of 518.14% and 160.7%, respectively.
The cryptocurrency market often has self-fulfilling prophecies; if history repeats itself, Ethereum's performance in Q1 this year may attract market attention once again.
The price performance of Ethereum often resonates with the market. During Q1, when the market generally performs well, it often benefits from factors such as DeFi and liquidity, resulting in an increase.
Long-term holders of ETH are still increasing their holdings.
Observing the dynamics of long-term holders is one of the methods to gain insight into the market. Continuous significant reductions in long-term holders usually indicate that the coin price is approaching its peak, while during significant price declines or when there is a positive outlook for future trends, long-term holders often increase their holdings, engaging in buying low and selling high, repeating this cycle.
The data in the figure below shows that long-term holders of BTC have been continuously reducing their holdings, possibly indicating that some long-term investors believe the price has reached their profit-taking zone. In contrast, the data for Ethereum appears relatively optimistic, rising from a total proportion of less than 60% mid-year to over 80% at its peak, with some recent pullback.
From the chart data, it can be seen that there are currently no significant returns for Bitcoin holdings over $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.
The staking and restaking data of Ethereum can also serve as an indicator 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 restaking data, after explosive growth at the beginning of the year, it entered a stable period and remained above 4 million ETH.
Ethereum spot ETF is expected to support staking.
Currently, the market only trades Ethereum spot ETFs and does not support staking rewards; however, 'Ethereum ETF staking' may be launched in the future. For investors in Ethereum spot ETFs, holding ETH through the ETF means missing out on staking yields, and in addition, they need 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 the beginning of staking for the Ethereum ETF is expected to be reconsidered. Unlike the last time, when under Chairman Gary Gensler, the realization of these two measures was almost zero, Hester Peirce expressed optimism about the potential for changes under the new management.
Cynthia Lo Bessette, head of Fidelity's digital assets management division, 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 Ethereum spot ETF supports staking for income, it will have a positive effect 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 its ecosystem's activity level is sluggish in 2024, with trading volumes stagnating and facing strong challenges from Solana and Sui. Ethereum needs to consider whether its core narrative positioning is still accepted and recognized by the public.
