Can the Ethereum rebound continue?

Recently, the focus of the cryptocurrency market has been concentrated on Ethereum. This once high-profile blockchain platform has performed poorly over the past few months, with price trends, market share, and community sentiment all at historical lows. However, in the past few days, Ethereum seems to show signs of a rebound. This article will explore the reasons behind Ethereum’s long-term stagnation and whether the current rebound can be sustained.

The Dilemma of Ethereum

Ethereum’s market performance has been less than satisfactory. Since December 2024, whenever the overall crypto market declines, Bitcoin always manages to rebound quickly and reach new highs, while Ethereum struggles to recover its previous price levels.

Let’s take a look at Ethereum’s recent market performance:

• In November 2024, the market is in an upward channel, with the Bitcoin price at approximately $96,405 and Ether at $3,703.
• On December 1, 2024, the market experienced a slight correction, with Bitcoin falling to $93,557 and Ether dropping to $3,337.
• On January 1, 2025, the price of Bitcoin slightly increased to $94,500, while Ether further decreased to $3,298.
• On February 1, 2025, Bitcoin plummeted to $84,381, and Ether fell to $2,236.

It is worth noting that when Bitcoin rebounded from its February low to $94,304 in April, Ethereum failed to follow suit and could not retest its previous highs. The BTC/ETH ratio continued to widen, highlighting the performance gap between the two.

As of now, the trading price of Ethereum is approximately $2,400, which has improved compared to recent performance, but it still has not been able to break through higher price ranges. So, what exactly is the reason for the sluggish performance of the Ethereum market?

Reasons for Ethereum’s Lackluster Performance

1. Bitcoin and meme coins are grabbing market attention

In recent months, Bitcoin and meme coins have become the stars of the market. The news that the U.S. government plans to establish a Bitcoin reserve has sparked widespread discussion, with several state governments actively promoting related plans. This has not only attracted the attention of retail investors but has also piqued the interest of institutional investors.

At the same time, the meme coin market is also exceptionally active. However, it is unfortunate that most of these popular meme coins are not issued on the Ethereum network. For example, Fartcoin, which has a market capitalization of over $1 billion, was launched on other blockchain platforms.

2. Transfer of liquidity to sub-network

Ethereum has long been plagued by high Gas fees, which has been a major factor limiting its development. Worse still, numerous Layer-2 solutions have emerged on the Ethereum network, such as Polygon, Optimism, Base, Linea, and Arbitrum. These Layer-2 networks not only compete with Ethereum for liquidity but also allow users to operate without needing a large amount of ETH, as they support stablecoins like USDC.

3. The Rise of Competitive Networks

Other blockchain platforms are gradually eating into Ethereum’s market share. These competitors provide developers and users with a better experience, including faster transaction speeds, lower fees, and more powerful features. For example, some blockchain platforms can handle up to 3,000 transactions per second, while Ethereum can only handle 15.

4. Institutional investor interest is limited

Compared to Bitcoin, Ethereum’s appeal among institutional investors is noticeably lacking. Data shows that the number of publicly traded companies holding Ethereum is very small, with a total value of less than $500 million, while Bitcoin’s figure exceeds $50 billion. Furthermore, the cryptocurrency ETF market highlights the demand gap between Bitcoin and Ethereum, with the latter’s inflows lagging far behind the former.

The Future of Ethereum: Can It Return to Its Peak?

To regain market dominance and attract widespread investment, Ethereum needs a significant breakthrough. Recently, the Ethereum network completed an upgrade, which is a positive sign. However, this upgrade does not address all the challenges of asset and data bridging in the Ethereum Layer-2 ecosystem. Other blockchain platforms still maintain advantages in certain aspects, such as allowing users to seamlessly switch between multiple decentralized applications.

Nevertheless, this upgrade seems to have had a positive effect on the price of Ethereum. In the past 24 hours, the price of Ethereum has risen by about 20%, reaching $2,400. Does this mean that Ethereum is about to return to its peak? We need to be patient and observe how much improvement the latest upgrade can bring to the Ethereum network, and whether these improvements are sufficient to help ETH rise again.