Article by Anderson Sima, Foresight News
Since the beginning of 2024, if crypto enthusiasts were to compile a list of the most disappointing crypto assets, Ethereum would undoubtedly top the list.
In the previous cycle, Ethereum shone brightly with new applications like DeFi and Non-Fungible Tokens, reaching a historic high of $4,800 and creating a wealth-generating code with over 20-fold gains, while Bitcoin soared ahead, raising high expectations for the "Ethereum killer".
However, in the new cycle, while Bitcoin has already surpassed $90,000, Ethereum has barely managed to hold above the $3,000 mark. It even briefly dipped below $2,200 after a brief surge to $4,000 at the start of the year, trapping many crypto enthusiasts who had been eagerly awaiting its rise, including the "Sun Gege" who is known for never taking losses. Even institutional investors have not been spared. Currently, the ETH/BTC exchange rate has fallen to a historic low of 0.034.
As the saying goes, "When the road ahead seems blocked, a new path emerges."
The author believes that the predicament Ethereum is currently facing is an inevitable stage in the early development of the Web3 industry. While Bitcoin has established a consensus in the digital gold domain, Ethereum's vision of a world computer has encountered some structural contradictions, so it has not been able to resonate with its market value, and it cannot realize its value expectations in the short term. However, the author believes that all the current difficulties are essentially paper tigers, and we are at the "dawn".
Ethereum's Predicament
The key difference between this crypto bull market and the previous two is that Ethereum has not led the technological innovation trend. Compared to the ICO frenzy in 2017 and the DeFi Summer in 2020, the biggest hype in this cycle has been MEME, and the MEME community is mostly on Solana; Ethereum's leading concepts of Layer2 and reStaking have actually had a partially negative impact on Ethereum's ecosystem.
Although the hundreds of Layer2 ecosystems have improved Ethereum's transaction experience and performance, they have also caused serious problems of flow diversion; the reduced Blob fees after the upgrade have also affected Ethereum's economic model and staking income. As the demand for ETH decreases and the burn rate is lower than expected, inflation has started to appear, which also weakens its potential as a value store; at the same time, Bitcoin has an irreplaceable appeal to institutional investors in the field of value storage, and the Ethereum spot ETF launched this year has become a lukewarm existence.
On the other hand, as a community leader, Vitalik's rationalist temperament has deeply influenced the entire ecosystem. Vitalik has a grand vision for Ethereum's future development, and he has recently written several long articles to conduct various studies on Ethereum's decentralization, security, and scalability.
However, from the community's perspective, some of these goals are too idealized and have a large gap with the current technical constraints and market expectations. At the same time, Vitalik has too much influence on Ethereum's community governance and decision-making, which is at odds with the ideal of decentralization, and may lead to an undemocratic and decentralized decision-making process, where the community's voice is inadvertently ignored, making him seem out of touch with the community's pursuit of wealth codes.
But isn't this just Vitalik? He is the one who cried over Blizzard's nerf of the Warlock skill, and then angrily entered the blockchain world to create Ethereum as a young man. If Vitalik becomes a non-stop shill and a paper-trading addict, that might be the crisis the Ethereum community needs to worry about FUD.
Dawn of a New Era
Although the rise of MEME culture and Solana has attracted a lot of attention in this cycle, this does not mean that Ethereum has not made any technological innovations. While Layer2 and reStaking may have brought some challenges in the short term, they provide a foundation for the sustainable development of the Ethereum ecosystem in the long run: by reducing transaction costs and increasing transaction speed, Layer2 solutions make Ethereum more suitable for large-scale applications, which is crucial for attracting more users and developers.
Regarding the concerns about decreased ETH demand and inflation, the Ethereum community and developers are actively seeking solutions: the community is discussing further adjustments to EIP-1559 to optimize the ETH burn and issuance mechanism.
At the same time, while Bitcoin has an attractive appeal to institutional investors in terms of value storage, Ethereum offers a more comprehensive ecosystem, including smart contracts, DeFi, Non-Fungible Tokens, etc. Ethereum and Bitcoin are complementary in many ways, rather than simply competing. Ethereum's multi-functionality gives it a unique position in the crypto currency field, allowing it to support a wider range of application scenarios, which is something that no other public chain can match. So-called "Ethereum killers" are not because Ethereum has problems, but because other public chains cannot replace Ethereum.
Ethereum's hope lies in its continuous technological progress, its strong developer community, and its ability to adapt to emerging market demands. However, in this cycle, Ethereum needs to focus on commercially viable applications while maintaining a long-term sustainable development, making each commercial application a stepping stone towards long-term thinking.
$10,000 is Not a Dream
The author boldly predicts that by the mid-2026 elections, Ethereum is likely to break through $10,000. Analysts at Standard Chartered Bank have reiterated the bank's price target for Bitcoin at $200,000 and Ethereum at $10,000 by the end of 2025.
With the changes in the US political landscape and Trump's support for the crypto currency market, a large amount of traditional capital is flowing into the crypto currency field. Once traditional capital truly enters the crypto market, Ethereum, as a mainstream crypto asset with a spot ETF, is very likely to attract more capital attention.
According to Farside Investors data, on November 12, the net inflow of the US Ethereum spot ETF reached $134.4 million, setting a historical record.
The launch of the Ethereum spot ETF provides important financial support for the growth of Ethereum's price. ETF investors in the traditional market are usually long-term investors, and the increased liquidity of the spot ETF has increased the market's demand for Ethereum. For traditional investors who already hold Bitcoin, Ethereum, with its innovative potential and ecosystem effects, is also one of the best channels for them to enter the crypto currency, which will further accelerate Ethereum's transformation into a mainstream investment tool.
As for the Layer2 flow diversion problem, as the Ethereum mainnet experience gradually improves and the competition subsides, we may see more L2 solutions integrated into the Ethereum mainnet. The smooth progress of this process will provide stronger traffic support and gas fee income for Ethereum, easing inflationary pressure and making Ethereum's economic model more robust.
It is expected that in the first half of 2025, the integration of Ethereum's L2 will gradually enter the substantive implementation stage, some Layer2 will be eliminated, and the L2 integration will attract more developers and users back to the mainnet, thereby driving the prosperity of the Ethereum ecosystem. During this stage, the price is expected to stabilize in the range of $3,000 to $5,000.
In the coming years, innovative applications such as PayFi and Real-World Assets (RWA) are expected to continue to grow, especially after the enhancement of smart contract functionality and the gradual improvement of L2 solutions, more complex financial applications will emerge. The birth of these applications is expected to re-ignite market demand for Ethereum.
For example, the integration of cross-chain liquidity based on L2 and the maturity of on-chain financial derivatives markets will bring a large trading volume, further enhancing Ethereum's value. RWA and payments that interact with traditional assets are potential killer applications. It is expected that in the second half of 2025, these emerging applications will drive Ethereum's value to break through $6,000 to $8,000.
At the same time, with the increasing influence of politicians such as Trump who support cryptocurrencies in the United States, it is expected that the cryptocurrency market in the United States will gradually usher in a relaxed regulatory environment in the future. In addition, the risk of global economic slowdown and fiat currency inflation will lead more investors to consider digital assets as a hedging tool, further increasing the demand for the cryptocurrency market.
If the United States and other major economies gradually relax the regulation of cryptocurrencies within the next 1-2 years, and the global investors' demand for hedging against inflation and fiat currency depreciation increases, this will provide a strong macroeconomic background support for the rise in the price of Ethereum. It is expected that in early 2026, under favorable market conditions, Ethereum may usher in a major price breakthrough and reach the $10,000 mark.
Recently, Vitalik was interviewed by Foresight News, and he mentioned a sentence in it, "The only surprise is that if Ethereum as an asset is not known to anyone, it cannot succeed, so from this point of view, Ethereum cannot be a completely background-like existence." Ethereum's ambition, people know.
