After a stunning growth cycle in 2021 with price increases of up to 400%, Ethereum (ETH) is facing a period of stagnation and losing its position. In 2024, ETH only recorded a modest increase of 47%, significantly lower than other top assets like Bitcoin and Solana, which have continuously set new price peaks. The weakening momentum of ETH has become increasingly apparent as we step into 2025, with prices dropping by up to 47% since the beginning of the year, reflecting this altcoin's lack of appeal in the eyes of investors.
ETH/BTC at record lows, SOL/ETH hits new highs
The ETH/BTC ratio has fallen to a record low, while the SOL/ETH ratio has reached a historic high – sharply reflecting Ethereum's relative weakness against both Bitcoin and Solana. According to assessments by Arthur Hayes and many industry experts, this decline is not only rooted in broader market trends but also stems from Ethereum's strategic and technical choices over the past year – including a focus on layer 2 solutions, changing value accumulation models, and a lack of investment appeal compared to emerging competitors.
ETH/BTC & SOL/ETH | Source: TradingView
The Dencun upgrade, deployed in March 2024, marks a significant technical advancement for Ethereum by introducing blobspace – a data expansion solution that increases throughput and reduces fees for layer 2 applications. However, this technical success has caused an economic backlash: network revenue plummeted, leading to a decrease in ETH burning rates, undermining the foundation of the 'ultrasound money' thesis – one of the main pillars supporting ETH prices.
As a result, Ethereum has shifted from a deflationary state back to inflation, with over 730,000 ETH issued net within just one year since April 2024. In the context of increased supply and weakened demand, selling pressure on ETH has become increasingly evident, helping to explain this asset's poor performance recently.
ETH supply growth | Source: YCHARTS
Solana leverages the 'Memecoin craze' to surpass Ethereum
In contrast to Ethereum's struggle with supply pressure and a lackluster investment narrative, Solana has fully capitalized on the memecoin wave to strengthen its position in the cryptocurrency ecosystem. The token creation platform Pump.fun, launched in early 2024, has become a hotspot for speculative activity, attracting over 17 million new wallets and issuing more than 9.6 million tokens, primarily self-created memecoins.
Key figures from Pumpfun | Source: Dune
This surge not only drove Solana's network revenue to skyrocket but also created a spillover effect on the price of SOL tokens. More importantly, Solana is gradually dominating core areas that Ethereum once ruled, including DeFi, NFT, and currently retail trading driven by memes – thereby asserting its increasingly clear role as a 'new Ethereum' in the market.
Bitcoin is backed by ETFs and corporations – Ethereum is not
Since being approved, spot Bitcoin ETFs in the United States have become a significant growth driver for the market, with net inflows exceeding $39.5 billion, contributing greatly to BTC's 130% price increase since the beginning of 2024. In contrast, Ethereum ETFs have only attracted about $2.49 billion, of which a large portion of the capital inflow in 2024 has been utilized by hedge funds to establish ETH basis trades, aiming to profit from the positive funding rate spread. However, after a sharp decline in the crypto market in Q1 2025, these Short positions were liquidated, increasing selling pressure and causing ETH's price to drop more sharply compared to Bitcoin and Solana.
CME ETH futures OI (Short) | Source: The Block
The reason for this disparity is quite clear: Bitcoin possesses a strong and easily understandable investment narrative – 'digital gold', widely accepted by traditional and institutional investors. In contrast, Ethereum still lacks a clear positioning in the eyes of institutional investors, making it more difficult to attract significant capital inflows.
Additionally, a series of large companies like Strategy, Metaplanet, and Tesla have publicly committed long-term support for Bitcoin by adding BTC to their corporate treasury, bolstering market confidence. Meanwhile, Ethereum has lacked similar support from the corporate sector, and to date, there are no signs of an 'ETH accumulation' strategy being implemented on a comparable scale.
ETH faces pressure from large-scale hacks
Ethereum has become a prime target for hackers, accounting for over 50% of the total cryptocurrency stolen in 2024. Notably, the Bybit hack in February caused damages of up to $1.4 billion in ETH, a major shock to the market, causing ETH prices to plummet sharply in a short period.
According to data from Immunefi, Ethereum is not only the most attacked platform but also records the highest number of on-chain hacks, presenting many security challenges for this ecosystem. This has caused significant psychological pressure on investors, both individual and institutional, increasing concerns about the safety and reliability of Ethereum in the long term.
Can ETH turn the tide?
In the face of growing criticism, the Ethereum Foundation has begun implementing a comprehensive restructuring. A new leadership structure is gradually taking shape, along with strategic plans to reposition Ethereum in the eyes of institutional investors.
The Pectra upgrade, expected to launch in May 2025, will bring significant improvements in scalability, security, and user experience, thereby hoping to meet the development and refinement needs of the Ethereum ecosystem. At the same time, the Ethrealize project, led by Vivek Raman and Danny Ryan – the individuals behind Ethereum's transition to Proof of Stake (PoS) – is focusing on developing a specialized product suite for financial institutions, aiming to restore Ethereum's trajectory and regain community trust.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.
