Ethereum does not arouse the same interest
NYDIG analysts, meanwhile, point out that the narrative of BTC as “digital gold” is at odds with that of ETH as “digital oil.” “It doesn’t seem to resonate as much with traditional investors, at least if flows into ETFs are any indication,” they noted.
This comparison is due to the fact that ETH is seen as a source of energy or fuel in the cryptocurrency ecosystem, just as oil is for many economic activities globally.
Ether is the fuel to run transactions, applications and smart contracts within the Ethereum network
However, this narrative did not carry over to ETH ETFs in the United States.
Since their launch in July 2024, these ETFs have seen outflows of more than $500 million.
It is important to note that at the time of publication of this note, the price of ether is $2,790, 42% below the all-time high it reached on November 16, 2021.
Another issue to consider is the inflationary effect caused by the Dencun upgrade of the Ethereum network. With its appearance, temporary data storage was introduced in the second layers or L2 of Ethereum, where transaction commission fees are cheaper.
What happens is that if demand moves to layer 2, the buying pressure on ETH is reduced since fewer users need that asset to pay gas fees.
If there is no corresponding increase in demand, downward pressure is generated on the asset price. It should be remembered that, unlike BTC, ether does not have a limited supply.
The 2017 bull run occurred because Ethereum facilitated a rise in altcoin dominance due to its ability to capture market attention. This was due to its role as a platform for decentralized applications (dApps) and as a fundraising venue for initial coin offerings (ICOs).
In contrast, in 2020-2021, the boom in decentralized finance (DeFi), non-fungible tokens (NFTs) and emerging competitors to the Ethereum network took center stage in altcoins' attention.
In this regard, NYDIG specialists add:
“There doesn’t seem to be (yet) one or two things that have captured the collective attention of the industry like they did in 2017 and 2021.”
