Five major catalysts, will ETH see a turnaround this year?

Foresight News Ethereum needs to consider whether its core narrative positioning is still accepted and recognized by the public. Written by: 1912212.eth, Foresight News In 2024, investors holding Ethereum have tasted all the sour, bitter, and spicy flavors, but none of the sweet. In terms of return multiples, not only has it significantly underperformed Bitcoin, but it also pales in comparison to other public chain tracks. Solana has already set a new historical high, with a return of more than 20 times from the bottom, and SUI has soared from $0.5 to around $5, a return of nearly 10 times. Ethereum has suffered a lot of questioning this year, with a weak ecosystem, and compared to the DeFi and NFT prosperity of the previous cycle, this round of innovation has been mediocre, which is reflected in the coin price. Will 2025 be the year of Ethereum's comeback? Ethereum Spot ETF Net Inflows After the US Ethereum spot ETF was officially approved in mid-2024, the market was initially not buying it, as the market sentiment was relatively sluggish, resulting in large negative net inflows. After three months of sluggishness, influenced by factors such as the market's recovery, Ethereum finally began to see large inflows in early November, and the net inflow of funds has always been far greater than the net outflow. By the end of November, its Ethereum spot ETF even saw a rare 18-day consecutive net inflow, with a single-day net inflow of over $400 million at its peak. Adjusted for market capitalization, this is equivalent to nearly $1.2 billion in daily inflows into Bitcoin, as Ethereum's market capitalization is about a quarter of Bitcoin's. This capital flow may reflect a reallocation of investment or an expansion of scope, which is in line with the typical start of the new fiscal year for US mutual funds on December 1, and also reflects the market's optimistic expectations for 2025. If this demand continues, 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 Stellar Q1 Performance in Recent Years In the first quarter of the past 8 years, Ethereum has seen an increase in 6 years. Especially in the first quarter after the US presidential election, such as 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 is often in sync 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 Holders of ETH Continue to Increase Their Holdings Observing the dynamics of long-term holders is one of the means to gain insight into the market. When long-term holders appear to be making large-scale reductions, it often indicates that the coin price is approaching the top, while when the price experiences a significant decline or the future trend is more optimistic, long-term holders often increase their holdings, practicing high selling and low buying, in a repeating cycle. The data in the chart shows that long-term BTC holders are continuously reducing their holdings, which may be because some long-term investors have psychologically estimated that the price has reached their profit-taking zone. In contrast, the data for Ethereum is relatively optimistic. It has risen from less than 60% of the total proportion in the middle of the year to over 80% at the highest, and has recently seen some pullback. From the chart data, it can be seen that currently, Bitcoin above $100,000 no longer has much upside, but the long-term holders of the market believe that Ethereum still has good opportunities next year. Staking and Re-staking Data Remain Stable and Upward Ethereum's staking and re-staking data can also be used as an indicator to observe its 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 entered a stable period 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 launched in the future. For investors in Ethereum spot ETFs, currently holding ETH through ETFs means missing out on staking returns, 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 the start of Ethereum ETF staking is likely to be reconsidered. Unlike last time, when under the leadership of Chairman Gary Gensler, the realization of these two measures was almost zero, Hester Peirce is optimistic about the possibility of these 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 and earning interest, it will have a boosting effect on Ethereum's coin price. Summary Although Ethereum is still worth looking forward to, it also faces significant challenges. Observing its Gas fee data, it can be found that the activity of its ecosystem was sluggish in 2024, with transaction volume stagnating, and it is facing strong challenges from Solana and Sui. Ethereum needs to consider whether its core narrative positioning is still accepted and recognized by the public.