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Ethereum will be great again
flowerThe latest report from the Banner Bank pointed out that Ethereum (ETH) price has fallen by more than 20% this year, but its fundamentals are improving.Total value lock-in (TVL) on the Ethereum network has risen sharply, while Ethereum ETFs are still attracting capital inflows, with cumulative inflows of US$3.2 billion since its launch in July.In addition, the popularity of related searches is also increasing.
Despite the recent fluctuations in user activity, Citi analysts say Ethereum’s fundamentals are not entirely pessimistic.The report also mentioned that former U.S. President Trump’s World Liberty Financial holds more than $200 million in Ether, which may be seen as an additional impetus for the U.S. to strengthen support for the crypto industry.At the same time, the weak performance of Ethereum is consistent with the rise in Bitcoin dominance, which has now risen to a multi-year high, exceeding 60%.
The Matrixport report noted that Ethereum’s Relative Strength Index (RSI) has fallen to an all-time low, approaching an extreme oversold range, which may provide conditions for an ETH price rebound.In addition, Ethereum’s highly-watched Pectra upgrade plan will be launched in March 2025. This upgrade integrates the original Prague and Electra versions, which are expected to significantly improve the scalability, efficiency and user experience of the network.
The report also mentioned that before the upgrade is officially launched in March, the market may issue multiple test network announcements, which may further boost market sentiment.Although Ethereum’s historical upgrade events are often accompanied by the “sell news” market, the current oversold market background may create opportunities for the rebound of ETH prices.
Paradigm is also actively bullish, believing that Ethereum has always been a pioneer in the crypto field.Ethereum paves the way for smart contracts, decentralized autonomous organizations (DAOs), and decentralized finance (DeFi), and continues to innovate on cutting-edge challenges such as zero-knowledge proof (ZK) and maximum extractable value (MEV).Ethereum’s researchers and engineer community has built a solid foundation for the next generation of decentralized applications.
HashKey Jeffrey believes that Ethereum was once the core promoter of the DeFi and NFT wave.However, after the market hotspots turned to AI, RWA (real world assets) and Memecoin in recent years, their dominance has been challenged.For example, many AI projects and Memecoin in the Solana ecosystem did not choose Ethereum as the main platform, resulting in its gradual marginalization in emerging narratives.
In addition, unlike the influx of funds when Bitcoin ETF was launched, capital outflows occurred after ETH ETF went public, partly due to the selling pressure of old Grayscale products.
Paradoxically, however, the long-term interest of institutions in ETH is still heating up.Bernstein analysts predict that ETH may become the “institutional darling” in 2025 due to mechanisms such as pledge income (28% ETH is pledged), smart contract locking (7.5%) and ETF absorption (3%).This misalignment between short-term and long-term expectations highlights the market’s confusion about ETH value capture capabilities.
Different views
Web3 accelerator and founder community Alliance DAO, two joint creations Imran Khan and Qiao Wang, shared their respective views on the podcast titled “On Consumer Crypto”:
Imran believes that “Base supporters in the current market have turned to Solana.” Qiao responded to this view: “Solana is easier to attract users. For developers familiar with EVM, it is not easy to turn to Solana, and it requires learning a whole set of things.Brand new tools, but even so, they still feel it’s worth it because Solana provides a better user base and ecological support.”
Qiao also said: “I actually have held Ethereum since the Creation block. But I sold it last year, and I held it for a full 10 years. You can imagine, holding an asset for 10 years and then suddenly, it’s like,The growth potential is almost over.”
JPMorgan (JPMorgan) pointed out in its latest report that Ethereum (ETH) has not performed as much as Bitcoin (BTC) and other competitive chains in recent years, mainly because it lacks market attractiveness similar to Bitcoin’s “digital gold” narrative, and is also facing SolanaFierce competition among blockchains.
In addition, Ethereum (ETH) short positions have surged 500% since November 2024 and increased by 40% in the past week, a record high, according to The Kobeissi Letter, indicating extreme bearish sentiment on ETH by Wall Street institutions.Although Bitcoin has set new highs, ETH is still about 45% lower than its historical high in 2021, forming a huge gap.After the Trump administration came to power, the SEC’s regulatory risks of ETH securities attributes have been reduced, and Eric Trump even publicly called for ETH, but market sentiment is still sluggish.
The current market discussions about the reasons why ETH is shorted by institutions on a large scale may involve market manipulation, institutional hedging strategies or bearish expectations for the development prospects of ETH. With the extreme accumulation of short positions, the market has begun to pay attention to whether ETH may be short squeeze (Short Squeeze) market conditions triggered a strong rebound.
Written at the end
Although Ethereum (ETH) prices have fallen recently, Ethereum’s fundamentals are improving.Total value lock-in (TVL) rises, and Ethereum ETFs attract a large amount of capital inflows.Despite facing fluctuations in user activity and market competition pressure, Ethereum is still a pioneer in areas such as smart contracts and decentralized finance (DeFi).
In the future, Ethereum will significantly improve the scalability, efficiency and user experience of the network in the Pectra upgrade launched in March 2025.Institutional long-term interest in ETH is also heating up, and its pledge income, smart contract locking and ETF absorption mechanism are expected to make it a “institutional darling.”Through continuous innovation and ecosystem optimization, Ethereum is expected to usher in a brilliant moment again!
