As we enter the new year, the cryptocurrency market is abuzz with predictions about which assets will thrive in 2025. In this article, we’ll delve into the views of several analysts on Ethereum’s prospects for the coming year.
Underwhelming Returns Expected from Ether
According to Markus Thielen, head of research at 10x Research, Ethereum may not be the wisest investment choice for a 2025 bull run. Thielen believes that Ether might deliver underwhelming returns compared with Bitcoin, citing several factors contributing to this assessment.
"While we appreciate Ethereum’s volatility, we believe it remains a poor medium-term investment and expect ETH to underperform BTC once again in 2025," Thielen said in a Dec. 30 market report. "As a result, our stance on Ethereum remains clear: ‘avoid.’"
Active Validators: A Key Metric for 2025
Thielen emphasized the importance of monitoring the trend in active validators, which had shown a negative growth rate over the past 30 days. This decline raises concerns about the increasing risk of more validators exiting the network.
"The growth rate of validators has turned negative, dropping by about 1% over the past 30 days," Thielen noted. "A rise in unstaking seems logical, as Ethereum lacks ‘real demand’ outside of staking."
Divergent Views on Demand for Ether
However, not all analysts share Thielen’s pessimistic view on Ethereum’s demand. Tim Lowe, chief business officer at Attestant, recently told Cointelegraph that demand for Ether can easily increase with refined marketing and a unified value proposition.
"Demand for Ether can easily increase with refined marketing and a unified value proposition," Lowe said. "This would naturally see it accrue more investors over time."
Ethereum’s Relative Performance
While Bitcoin has seen significant growth since Jan. 1, 2024, Ethereum has underperformed against its rival. According to CoinMarketCap data, Bitcoin is up 121.4% since the start of the year, while Ether clocked a 46.3% return over the same period.
The launch of spot Bitcoin exchange-traded funds (ETFs) in January 2024 was met with strong demand, contributing to Bitcoin’s price surge. In contrast, US Ether ETFs launched in July with significantly less demand, leading to a more bearish view of the asset.
Duncan Upgrade: Too Little, Too Late?
Thielen expressed skepticism about the Duncan upgrade, which reduced gas fees and allowed the network to handle more transactions. However, this upgrade arrived six months too late, missing the peak of the memecoin rally.
"The Duncan upgrade arrived six months too late," Thielen said. "It missed the peak of the memecoin rally, and the market shifted to the ‘more cost-effective’ Solana alternative."
Pectra Upgrade: Another Uncertainty
Thielen is also skeptical about the Pectra upgrade, which is due to be introduced in early 2025.
"Of the 19 upgrades so far, only two have had a notable positive impact on price," Thielen noted. "Even those occurred during Bitcoin bull markets."
Ethereum’s Price Uncertainty
While some analysts predict that Ether will continue to underperform against Bitcoin in 2025, others see its price as uncertain and potentially moving in either direction.
Pseudonymous crypto trader Cold Blooded Shiller said in a Dec. 31 X post that Ether has been "rangebound" since Dec. 25, with two possible scenarios playing out:
"On the optimistic side, Ether might stage a ‘sweep and run’ to the upside, triggering a price breakout," Shiller said. "Or it could break down to the Dec. 20 range low, potentially retesting the $3,000 level."
Dal’s Two-Scenario View
Echoing a similar scenario, pseudonymous crypto trader Dal said Ether could go in one of two directions:
"Compressing and breaking below 0.04 BTC/ETH," Dal said. "Or exploding above 0.05 BTC/ETH."
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This article is for general information purposes only and should not be taken as investment advice.
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