Written by: 1912212.eth, Foresight News
In 2024, investors holding Ethereum have experienced all kinds of ups and downs, but not sweetness. In terms of return multiples, not only has it significantly underperformed Bitcoin, but it is also lackluster in the public chain track. Solana has already set a record high, with a return of more than 20 times from the bottom. SUI has soared from $0.5 to a maximum of around $5, with a return of nearly 10 times.
Ethereum has been plagued by doubts this year and its ecosystem is weak. Compared with the prosperity of DeFi and NFT in the previous cycle, this round of innovation has performed mediocrely. The comprehensive reaction is reflected in the price of the currency. So will 2025 be the year of Ethereum's turnaround?
Ethereum Spot ETF Net Inflow
After the US Ethereum spot ETF was suddenly officially approved in mid-2024, the market was initially not convinced. The market was relatively sluggish at the time, so the inflow of funds was a large negative value.
After a three-month downturn, affected by factors such as the overall market recovery, Ethereum finally began to show large inflows in early November, and the net inflow of funds has always been far greater than the net outflow of funds.
At the end of November, its Ethereum spot ETF even saw a rare 18-day streak of net inflows, with the highest single-day net inflow exceeding $400 million. Adjusted for market value, this is equivalent to nearly $1.2 billion in inflows into Bitcoin every day, as Ethereum's market value is about a quarter of Bitcoin's. This flow of funds may reflect a readjustment or expansion of investment direction, which coincides with the new fiscal year that US mutual funds usually start on December 1, and also reflects the market's optimistic expectations for 2025. If this demand continues, the price of Ethereum in 2025 may rise significantly.
As of press time, the Ethereum spot ETF has accumulated a total net inflow of US$2.64 billion.
Ethereum has performed well in Q1 over the past few years
Ethereum has seen an increase in the first quarter of the past eight years, with six of them seeing an increase. Especially in the first quarter of the new year after the US election, such as in 2017 and 2021, Ethereum achieved a quarterly increase 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 also tends to resonate with the market. In the first quarter when the market generally performs well, it often benefits from factors such as DeFi and liquidity to achieve an increase.
ETH long-term holders are still increasing their holdings
Observing the dynamics of long-term holders is one of the means of gaining insight into the market. Long-term holders continue to sell off their holdings, which often means that the price of the currency is approaching the top. When the price drops sharply or is optimistic about the future trend, long-term holders often increase their holdings, sell high and buy low, and repeat this cycle.
The data in the figure below shows that long-term BTC holders are continuously reducing their holdings, which may be because some long-term investors have reached their profit-taking area. On the other hand, the data of Ethereum is relatively optimistic. From less than 60% in the middle of the year, it rose to a maximum of over 80%, and is currently falling back.
From the chart data, we can see that there is no significant return for Bitcoin above $100,000 at present, but long-term market holders believe that Ethereum still has good opportunities next year.
Pledge and re-pledge data remain stable and upward
Ethereum staking and re-staking data can also be used as an indicator to observe its market confidence.
Ethereum's pledged amount has increased from less than 35 million ETH at the beginning of 2024 to 55 million ETH at the end of the year. In terms of re-pledge data, after the explosive growth at the beginning of the year, it has 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 its staking income, but "Ethereum ETF staking" may be launched in the future. For investors in Ethereum spot ETFs, currently holding ETH in the form of ETFs means missing out on staking yields, and also having to pay a management fee of 0.15% to 2.5% to the ETF issuer.
SEC Commissioner Hester Peirce recently said that the possibility of physical redemption and Ethereum ETF starting to pledge is expected to be reconsidered. Unlike the last time, when the implementation of these two measures was almost 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 said in an interview that the launch of Ethereum ETF staking is only a matter of time, not if it happens.
It can be foreseen that once the Ethereum spot ETF supports staking and interest-earning, it will have a boosting effect on the price of Ethereum.
summary
Although Ethereum is still worth looking forward to, it also has considerable challenges to face. Observing its gas fee data, it can be found that the activity of its ecosystem was sluggish in 2024, and the transaction volume was also stagnant. In addition, facing strong challenges from Solana and Sui, Ethereum needs to think about whether its core narrative positioning is still accepted and recognized by the public.
