I have always said that Ethereum is currently the biggest value depression in cryptocurrency.
How deep is this depression, really? Just take a look at its comparison with Bitcoin's market share and you'll understand.
As can be seen from the above chart, Bitcoin's market share has reached 60%, while Ethereum is down to just 10%, hitting a new low in nearly four years.
1. What is the problem with Ethereum?
Analysts at JPMorgan have provided a table, which might give you a rough idea.
Firstly, the current amount of ETH has not significantly increased, rising from 120 million to just under 121 million, with an inflation rate of less than 1%, far lower than Solana's 4.78%.
The problem may lie in item 8 (see the chart above), where gas fees suddenly dropped by 54%. There are two main reasons:
One is that Ethereum's own L2 has siphoned off part of it;
Another factor is the wave of 'shitcoins' that Ethereum missed.
It should be noted that using 'shitcoin' instead of 'meme coin' is because these coins are purely tools for harvesting investors, fundamentally different from traditional meme coins like PePe, Doge, and SHIB. Calling them 'shitcoins' can help more people stay away from them.
Due to the continuous negative news from 'shitcoins' affecting Solana, first the Trump couple, now the Argentine president Milei, this has led people to start re-examining what Solana's core value actually is.
It is certain that the 'shitcoins' have only temporarily brought traffic to Solana, and Solana is currently being backfired by them. This is another topic, which we will discuss another day.
Due to Solana's inherent lack of decentralization, it is destined not to become a stage for large capital. In contrast, decentralization is Ethereum's advantage, as demonstrated in item 5 of the above chart. Even if the price of ETH could not rise, the TVL measured in ETH has been continuously increasing, and it has risen significantly by 25%, which is truly remarkable.
The distribution map of TVL below is a true reflection of Ethereum's dominant position in decentralized finance. Currently, Ethereum's TVL is 7 times that of Solana.
Decentralization is the essence of Ethereum and the capital that allows it to take off. So, why can we say that Ethereum should 'take off now'?
2. Smart money tells you
In Wednesday's article (430 million outflows! The crisis and opportunity of Bitcoin), I mentioned the outflow of 430 million from Bitcoin ETP. I didn't have time to discuss the details of the inflow into Ethereum ETP, as shown in the box in the following chart.
On the surface, it seems that Ethereum also saw an outflow of 7 million last week, while only Solana and XRP had inflows of 8.9 million and 8.5 million respectively due to the potential SEC approval of their ETF applications (see the red circle in the chart above).
However, comparing the inflows into Ethereum this month and this year, you will find that more institutional smart money is accelerating its entry into Ethereum ETP.
Considering that the current crypto ETP in the U.S. holds 75% market share and that the U.S. does not have a Solana ETP yet, the data above from Solana only represents the attitude of 25% market share. Let's convert the inflows from Solana this month and this year into the overall market attitude.
Have you noticed that after conversion, Ethereum's inflow this month is still 9.6 times that of Solana, and its inflow this year is 4.5 times that of Solana.
It is clear that more smart money is flowing into Ethereum. The possible reason, as I mentioned in (Good Examples of Learning Institutions), is that Goldman Sachs increased its holdings in Ethereum ETF by 2000% in the fourth quarter of last year. The power of examples is immense.
It seems that everything is ready, so where is the favorable wind?
3. Where is the favorable wind?
There are two favorable winds: one is the SEC's approval of Ethereum ETF staking, and the other is Ethereum's upgrade set for 2025.
The first favorable wind: Regulatory breakthrough for staking ETFs
Cboe BZX Exchange has submitted a proposal to the SEC requesting permission for the 21Shares Core Ethereum Exchange-Traded Fund (ETF) to conduct Ethereum staking. Once approved, ETH ETF will also become an income-generating asset class, potentially igniting an investment frenzy in ETH ETFs. Following this, the New York Stock Exchange has also requested the staking of Grayscale's Ethereum ETF.
Once approved, it means that traditional investors can not only hold ETH but also earn an annualized return of 3.5%-5% through staking. It is estimated that if the SEC approves such ETFs, the annual staking yield for Ethereum could exceed $5 billion, making it a 'magnet' for attracting traditional capital. More critically, the opening of staking functionality will allow Ethereum ETFs to transition into 'income-generating assets', fundamentally rewriting their valuation logic—staking ETFs might open up a trillion-dollar market for ETH.
The second favorable wind: Pectra upgrade reshapes the technological foundation
If staking ETFs are the key to unlocking capital, then the Pectra upgrade in April 2025 is the engine for Ethereum's self-revolution. This upgrade includes three major killer features:
EIP-3074: Allows users to combine multiple transactions into a single operation, with gas fees paid by a third party. This improvement directly addresses Ethereum's 'user experience ailment' and is expected to reduce interaction costs for ordinary users by over 50%. For example, project teams can pay transaction fees on behalf of users like 'treating them to a meal', completely eliminating the entry barrier for newcomers to DeFi.
EIP-7251: Increases the staking limit of a single verification node from 32 ETH to 2048 ETH. This reform directly benefits institutions—staking service providers like Lido can reduce the number of nodes by 98%, lowering operational costs while increasing network speed. Analysts estimate that this move could attract over $20 billion in new staking funds.
ERC-7683 and 7841: The unification of cross-chain standards allows for smoother asset flow between Ethereum L2s, akin to 'high-speed rail transfers'. Uniswap and Across Protocol have already built cross-chain order systems based on this standard, with a projected 70% reduction in transaction failure rates and a liquidity pool depth increase of over three times.
If the arrival of the first favorable wind is still uncertain, then the arrival of the second favorable wind is only a matter of time.
Conclusion
Ethereum's prolonged price stagnation has made many forget its numerous advantages.
As the world's first programmable blockchain, Ethereum has a strong network effect and a large developer community. Its smart contract functionality and decentralized application platform provide fertile ground for countless innovative projects. As more large institutional funds flow into Ethereum ETP, Ethereum's value will be rediscovered.
So are you ready to make a big move? Wait a minute, let me show you a chart.
When I wrote this article, the price of ETH was 2702. If the price does not rise and falls instead, more than 800 million long positions will be liquidated near 2566.5. Don't forget that the current ETH price is still determined by centralized exchanges, and most centralized exchanges lack regulation. Before Ethereum takes off, it's not difficult to siphon off some profits and collect a bit, drawing a 'U' on the chart. If you have any doubts about this, take a look at (Is a big surge imminent? Beware of the black hand!).
Leverage can amplify gains but also accelerate destruction—controlling risk and preserving principal is the way to survive.
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