Market Reignites Bullish Sentiment: Can ETH Make a Comeback？

[TL;DR]:

ETH investors have undoubtedly experienced a mix of emotions in the past year.
Not only has the price increase lagged behind Bitcoin, but it has also paled in the public chain arena compared to Solana‘s 20-fold surge and SUI’s 10-fold returns, becoming just another player in the crowd. However, signs indicate that ETH may be gearing up for a comeback.

Introduction

ETH has faced significant skepticism in this round compared to the previous cycle’s DeFi and NFT boom. Numerous analyses point out that ETH is encountering severe upward resistance and is shifting towards inflation, with nearly all DeFi transactions being executed on Layer 2 continuously dragging down ETH’s price. However, since Trump’s election, everything has started to change. Not only has the inflow of capital into ETH spot ETFs undergone a dramatic turnaround, but the market has also begun to circulate bullish forecasts for ETH’s future… So, will 2025 truly be a turnaround year for ETH?

Significant Inflows into ETFs

In mid-2024, the U.S. Ethereum spot ETF was approved. However, due to a sluggish market at that time, investor response was tepid, leading to substantial negative capital inflow. After about three months of stagnation, with the overall market warming up, Ethereum saw significant capital inflows at the beginning of November, with net inflows consistently exceeding net outflows.

By the end of November, the Ethereum spot ETF recorded 18 consecutive days of net inflows, setting a rare record, with the highest single-day net inflow exceeding $400 million. Adjusted for market capitalization, this is equivalent to nearly $1.2 billion in daily inflows for Bitcoin, as Ethereum’s market cap is only a quarter of Bitcoin’s. This capital movement may reflect a reallocation of assets by investors or an expansion of investment scope, coinciding with the start of the new fiscal year for U.S. mutual funds on December 1, and demonstrating the market’s optimistic expectations for 2025. If this demand for capital continues, Ethereum’s price could significantly increase in 2025.

Institutions Bullish on ETH’s Future

In addition to active ETFs, institutional investors have shown great confidence in ETH.

Carlos Mercado, a data scientist at blockchain strategy firm Flipside Crypto, noted that the number of Ethereum stakers has increased by over 30% in the past year. According to a survey by New York-based blockchain intelligence firm Blockworks Research conducted last October, 69.2% of respondents chose to stake Ethereum, with 78.8% coming from investment firms or asset management companies. Additionally, survey data indicates that over 52% of respondents participated in liquid staking, suggesting that traditional financial participants increasingly understand and apply Ethereum’s DeFi ecosystem.

Bloomberg senior ETF analyst Eric Balchunas pointed out that since Trump’s victory, the Ethereum ETF has recovered from a capital outflow predicament and has welcomed net inflows. The Bloomberg Intelligence data he cited shows that the cumulative capital flow of Ethereum ETFs has turned positive, further proving that institutional investors’ trust in Ethereum is continuously strengthening.

Technical Analysis Favoring ETH

Moreover, technical analysis also indicates that ETH may be at a turning point.

The price ratio between ETH and BTC is at a cyclical turning point and has formed a bottom. Based on experience, this suggests that Ethereum’s price may soon rise, potentially even outpacing Bitcoin’s gains.

Well-known commodities and forex trader Peter Brandt also posted, “A letter from the grave?” along with a chart showing the price of Ethereum relative to Bitcoin. This chart illustrates how ETH surged four years ago when the ETH/BTC ratio was low.

DApp Trading Volume Growth Leading the Way

The fundamentals affecting Ethereum’s price include the monthly active users of decentralized applications (DApps) supported by the Web3 ecosystem or its blockchain network.

According to DApp Radar data, Ethereum’s DApp trading volume has significantly increased, aligning almost perfectly with the rise in ETH futures trading volume and ETF capital inflows. In the past 30 days, Ethereum’s DApp trading volume has far outpaced other DeFi tokens, totaling approximately $208 billion, greatly exceeding other tokens.

Support from the Trump Family

In addition to fundamental factors, support from the family of U.S. President Trump has also become a potential price support point.

The Trump family project WLFI has recently purchased several Ethereum ecosystem tokens, including AAVE, LINK, ENA, and ONDO, with ETH remaining the largest holding in their portfolio.

Just yesterday, WLFI announced on the X platform that in commemoration of Trump’s inauguration as the 47th President of the United States, they would strategically buy $47 million worth of ETH. With the president on board, what is there to hesitate about?

Increasing Frequency of Bullish Predictions

As favorable factors increase, bullish predictions in the market are also becoming more frequent.

Cryptocurrency analyst Ali Martinez mentioned at the end of last year that ETH will outperform Bitcoin by the end of this macro market cycle. In his optimistic forecast for the coming months, he believes Ethereum will rise to $6,000 while also predicting that Ethereum will reach at least $4,000 in this cycle. He stated, “Every market cycle goes through a phase where Ethereum outperforms Bitcoin, which has not yet occurred in the current cycle but is certainly imminent. Since ETH is still lagging, there is an opportunity to buy before it outperforms the market.”

NDV co-founder Christian 2022.eth also stated that he has gradually built a position of over $8 million in BNB since October, believing that in the second half of the bull market, BNB and ETH will catch up and lead the way.

Historical data also supports similar optimistic expectations. According to Coinglass data, in the first quarter following historical U.S. elections and Bitcoin halving cycles, ETH has performed the best, particularly in the first quarters of 2017 and 2021, where ETH rose by 518% and 161%, respectively, even surpassing BTC’s returns in those two quarters (11.9% and 103.2%).

Market Still Holds Bearish Views

However, not everyone is bullish on ETH’s future.

Markus Thielen, founder of 10x Research, holds a bearish view on ETH, predicting that ETH will continue to perform poorly and will not reach new historical highs in the “hawkish” macro environment of 2025: “We expect a more conservative outlook for ETH in 2025. Unlike previous years, the initial hawkish policies may face challenges from diminishing liquidity tailwinds.”

Moreover, ETH’s development indeed faces challenges. In 2024, its ecosystem is experiencing low activity, and trading volume remains stagnant, facing strong competition from Solana and Sui. ETH also grapples with pressure on its core narrative being questioned.

In conclusion, amidst the ongoing market fluctuations, both bullish and bearish statements are based on their perspectives, and before making any decisions, it is crucial to remember DYOR (Do Your Own Research).