Author: 1912212.eth, Foresight News
In 2024, Ethereum investors have experienced all the ups and downs, except for the sweet spot. In terms of return multiples, Ethereum not only significantly underperformed BTC, but also lacked luster compared to other public chain tracks. Solana has already set a new historical high, with over 20x returns from the bottom, and SUI has soared from $0.5 to around $5, a return of nearly 10x.
Ethereum has suffered from doubts this year, with a weak ecosystem. Compared to the DeFi and NFT prosperity in the previous cycle, the current round of innovation has been mediocre, which is reflected in the coin price. Will 2025 be the year of Ethereum's comeback?
Inflows into Ethereum Spot ETF
The US Ethereum spot ETF was officially approved in mid-2024, but the market was initially skeptical, as the market sentiment was relatively sluggish, resulting in large net outflows.
After three months of sluggishness, influenced by factors such as the market recovery, Ethereum finally began to see large inflows in early November, with net inflows consistently far exceeding net outflows.
By the end of November, its Ethereum spot ETF even saw a rare 18-day consecutive net inflow, with a single-day net inflow exceeding $400 million. Adjusted for market capitalization, this is equivalent to nearly $1.2 billion in daily inflows into BTC, as Ethereum's market cap is about a quarter of BTC's. This capital flow may reflect a reallocation of investment or an expansion of scope, coinciding with the typical start of the new fiscal year for US mutual funds on December 1, and also reflecting the market's optimistic expectations for 2025. If this demand persists, Ethereum's price may rise significantly in 2025.
As of the editorial deadline, the Ethereum spot ETF has accumulated a total net inflow of $2.64 billion.
Ethereum's Strong Q1 Performance in Recent Years
In the first quarter of the past 8 years, Ethereum has seen an increase in 6 years. Particularly in the first quarter after the US presidential election, such as in 2017 and 2021, Ethereum achieved quarterly gains of 518.14% and 160.7%, respectively.
The crypto market often has a self-fulfilling prophecy, and if history repeats itself, Ethereum's performance in Q1 this year may once again attract market attention.
Ethereum's price performance also often resonates with the market. In Q1 when the market generally performs well, Ethereum often benefits from factors such as DeFi and liquidity to achieve an increase.
Long-term ETH Holders Continue to Accumulate
Observing the dynamics of long-term holders is one way to gain insight into the market. When long-term holders see significant reductions, it often indicates that the coin price is approaching a top. When the price experiences a significant decline or the future outlook is more optimistic, long-term holders tend to increase their holdings, practicing high-sell and low-buy, in a repeating cycle.
The data in the chart shows that BTC long-term holders are seeing continuous reductions, which may indicate that some long-term investors have reached their profit-taking zone. In contrast, the Ethereum data appears more optimistic. The total proportion has risen from less than 60% in the middle of the year to over 80% at the highest, and has since seen some pullback.
The chart data shows that currently, BTC holdings above $100,000 no longer have significant returns, but long-term Ethereum holders believe the coin still has good prospects for next year.
Staking and Re-staking Data Remains Stable and Upward
Ethereum's staking and re-staking data can also be used as an indicator of market confidence.
Ethereum's staked amount has 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 re-staking data, after an explosive growth at the beginning of the year, it has stabilized and remained above 4 million ETH.
Ethereum Spot ETF May Support Staking
Currently, the market can only trade through Ethereum spot ETFs and does not support staking rewards. However, "Ethereum ETF Staking" may be introduced in the future. For Ethereum spot ETF investors, holding ETH through ETFs means missing out on staking rewards, and they also need to pay management fees of 0.15% to 2.5% to the ETF issuer.
SEC Commissioner Hester Peirce recently stated that the possibility of physical redemption and Ethereum ETF staking is likely to be reconsidered. Unlike the previous time when, under the leadership of Chairman Gary Gensler, the realization of these two measures was almost zero, Hester Peirce is optimistic about the potential for changes under the new administration.
Cynthia Lo Bessette, head of Fidelity Digital Asset Management, also stated in an interview that the launch of Ethereum ETF staking is just a matter of time, not a question of whether it will happen.
It can be foreseen that once Ethereum spot ETFs support staking rewards, it will have a positive impact on Ethereum's coin price.
Summary
While Ethereum is still worth looking forward to, it also faces significant challenges. Observing its Gas fee data, it can be seen that the activity of its ecosystem was sluggish in 2024, with transaction volume stagnating, and facing strong challenges from Solana and Sui. Ethereum needs to reflect on whether its core narrative is still accepted and recognized by the public.
