Can Ethereum Return to Its Peak? An Analysis of Its Market Dilemmas and Future Prospects

Recently, Ethereum's market performance has attracted widespread attention in the cryptocurrency world. As one of the top cryptocurrencies, Ethereum has experienced a significant period of stagnation over the past few months, with its price trends, market share, and community sentiment all at historical lows. However, in the past few days, Ethereum seems to be showing signs of a rebound. This article will delve into the reasons behind Ethereum's continued slump, as well as whether the current rebound can propel it back to its peak.

Ethereum's Market Predicament

The market performance of Ethereum has been unsatisfactory. Since December 2024, whenever the overall cryptocurrency market declines, Bitcoin often manages to quickly recover and reach new highs, while Ethereum struggles to return to its previous levels.

Reviewing Ethereum's recent market performance: In November 2024, the market was in an upward channel, with Bitcoin priced at approximately $96,405 and Ethereum at $3,703. On December 1, 2024, the market saw a slight pullback, with Bitcoin dropping to $93,557 and Ethereum falling to $3,337. Despite both cryptocurrencies reaching key price levels later in the month, they failed to maintain their upward momentum and fell again.

By January 1, 2025, the price of Bitcoin slightly rebounded to $94,500, while Ethereum continued to decline to $3,298. On February 1, Bitcoin dropped sharply to $84,381, and Ethereum fell to $2,236. Although Bitcoin reached a high of $102,000 at the end of February, Ethereum failed to follow the rebound to its previous high. In fact, when Bitcoin rebounded from $84,381 in February to $94,304 in April, Ethereum continued to decline, struggling to retest previous highs. The widening BTC/ETH ratio clearly reflects this trend.

As of the time of writing, the trading price of Ethereum is around $2,400. Considering its recent performance, this is a good increase. However, it still hasn't broken through to a higher price range. So, what issues is the Ethereum market actually facing? Let's analyze a few key factors.

Bitcoin and meme coins seize the market spotlight

In recent months, Bitcoin and Meme Coins have become the focus of market attention. The news about the U.S. government planning to establish a Bitcoin reserve has sparked widespread discussion, and many U.S. state governments are actively promoting strategic Bitcoin reserve plans. Texas and New Hampshire have made substantial progress in this regard, with other states and some countries following suit.

This level of sovereign interest has further attracted the attention of market whales and institutional investors. Recently, a large publicly listed company announced an increase in its Bitcoin holdings, consolidating its position as the publicly listed company with the most Bitcoin. Out of a total supply of 21 million Bitcoins, the company holds over 555,000 Bitcoins.

Meanwhile, meme coins are also diverting attention in the market. One of the most successful meme coins of 2025, Fartcoin, has a market cap exceeding $1 billion and was launched on a non-Ethereum chain. The popular meme coin issuance platform PumpFun has also chosen the same blockchain. Most of the hottest meme tokens created at the end of 2024 and in 2025 come from this platform.

Therefore, Ethereum has clearly missed out on this wave of excitement. Additionally, discussions about decentralized finance ( DeFi ) have also noticeably decreased due to a lack of significant innovation. Overall, Ethereum is not at the center of any major market hotspots, lacking the key factors to drive price increases.

Transfer of Liquidity to Subnetworks

The high Gas fees of Ethereum have always been a major obstacle to its development. Even worse, numerous Layer-2 networks have emerged on the Ethereum network, such as Polygon, Optimism, Base, Linea, and Arbitrum. These Layer-2 networks compete for liquidity with Ethereum. Thanks to the existence of USDC, these networks can operate without requiring a large amount of ETH. More importantly, these Layer-2 platforms support a variety of activities, reducing the demand for transactions through the Ethereum main chain. Therefore, even in cases of high on-chain usage, the demand for ETH has not increased as expected.

The Rise of Competitive Networks

Some competing blockchains offer developers and users a higher quality experience, undermining Ethereum's market dominance. These emerging blockchain networks provide faster, cheaper, and more powerful services, attracting more and more developers and ordinary investors. According to a report from a certain data platform, the ongoing activity on these emerging chains reveals the reasons for their appeal:

1. Higher performance and scalability: Some emerging blockchains can process up to 3,000 transactions per second, theoretically even reaching 65,000 TPS. In contrast, Ethereum's processing capacity of 15 transactions per second is clearly insufficient. Considering the extremely low cost of processing large transactions on emerging blockchains, developers are more inclined to choose them.

2. Active and supportive ecosystems: These emerging blockchain ecosystems provide developers with abundant resources and tools, fostering their growth. They offer developer toolkits and funding opportunities, enabling new projects to emerge rapidly.

The adoption of these Layer-1 platforms by institutions will further undermine Ethereum's dominance. Some emerging platforms have made significant progress in areas such as perpetual futures trading and the stablecoin market.

Limited Institutional Interest

While global companies, market giants, and countries continue to accumulate Bitcoin, the situation for Ethereum is starkly different. According to statistics from a data platform, there are very few publicly traded companies holding Ethereum, with a total value of less than $500 million, while the figure for Bitcoin exceeds $50 billion.

The cryptocurrency ETF market also shows a huge gap between the demand for Bitcoin and Ethereum, with the latter failing to record high capital inflows like the former. ETF inflow data indicate that Bitcoin, leveraging its first-mover advantage and widely accepted store of value function, has attracted a large number of institutional investors. Although Ethereum has also recorded billions of dollars in capital inflows in spot ETFs, its scale is still far behind that of Bitcoin.

The Future of Ethereum: Can It Return to Its Peak?

Ethereum needs a major breakthrough to regain market dominance, attract widespread investment, and achieve a surge in value. Recently, Ethereum has just activated a network upgrade. This is a positive development, but it still cannot fully address the challenges of asset and data bridging in the Ethereum Layer-2 ecosystem. Certain competitors still hold an advantage as users can seamlessly switch between multiple decentralized applications (DApps).

Nevertheless, this upgrade seems to have had a positive impact on the price of Ethereum, with a 20% increase in the past 24 hours, reaching $2,400. Whether this rebound can be sustained and whether Ethereum can return to its peak remains to be seen. We need to patiently observe the improvements brought to the Ethereum chain by the recent upgrade and whether these enhancements are sufficient for ETH to regain market favor. The future development of Ethereum is still full of uncertainties, but its important position in the cryptocurrency space cannot be ignored.