A Bullish or Bearish Year Ahead?
As we step into the new year, crypto analysts are divided on Ethereum’s (ETH) investment potential. While some predict a bull run for ETH, others foresee a lackluster performance against Bitcoin (BTC). In this article, we’ll delve into the arguments presented by 10x Research’s head of research, Markus Thielen, and other experts to understand why ETH might not be the wisest investment choice in 2025.
Underwhelming Returns for Ethereum?
According to Thielen, Ether might deliver underwhelming returns compared to Bitcoin in a potential bull run. He emphasized that one of the key metrics to watch in 2025 will be the trend in active validators. Unfortunately, the growth rate of validators has turned negative, with a decline of around 1% over the past 30 days. This development raises concerns about the increasing risk of more validators exiting the network.
Active Validators: A Cause for Concern?
A closer look at the data reveals that Ethereum’s active validator count has been steadily decreasing. Thielen pointed out that this trend could lead to a rise in unstaking, which would further exacerbate the issue. He argued that Ethereum lacks "real demand" outside of staking, making it unlikely to attract new investors.
Counterarguments: Demand for Ether Can Increase
However, not all experts agree with Thielen’s assessment. Attestant’s chief business officer, Tim Lowe, recently shared his insights on Cointelegraph, stating that demand for Ether can easily increase with refined marketing and a unified value proposition. This would naturally lead to more investors flocking to the asset.
Historical Performance: Bitcoin vs. Ethereum
To put Thielen’s predictions into perspective, let’s examine the historical performance of both assets. According to CoinMarketCap data, Bitcoin is up 121.4% since January 1, 2024, while Ether has clocked a 46.3% return over the same period.
The Impact of ETFs on Market Performance
One significant event that contributed to Bitcoin’s impressive gains was the launch of spot exchange-traded funds (ETFs) in the United States. These ETFs were met with strong demand, which helped push Bitcoin’s price to new highs within two months. In contrast, Ether ETFs launched later and received significantly less demand.
Upgrades: Will They Make a Difference?
Thielen also expressed skepticism about the upcoming Pectra upgrade, due to be introduced in early 2025. He noted that out of the 19 upgrades implemented so far, only two have had a notable positive impact on price – and even those occurred during Bitcoin bull markets.
A History of Disappointment?
The Duncan upgrade in March is another example cited by Thielen. Although it reduced gas fees and allowed for more transactions, it arrived six months too late to make a meaningful impact. The market had already shifted to the "more cost-effective" Solana alternative during the memecoin rally.
What’s Next for Ethereum?
Given the uncertain outlook, crypto analysts are divided on ETH’s investment potential in 2025. Some predict a bull run, while others foresee underwhelming returns compared to Bitcoin. Pseudonymous crypto trader Cold Blooded Schiller presented two possible scenarios: a "sweep and run" to the upside or a breakdown to the Dec. 20 range low.
Breaking Out?
Crypto analyst Dal echoed a similar scenario, suggesting that Ether could either break through the $3,554 level or sweep back down to $3,102.
Bullish on Ether?
Not all analysts share Thielen’s pessimistic view. MN Capital founder Michael van de Poppe is more bullish on ETH and believes it is showing signs of breaking out relative to Bitcoin in January 2025. He wouldn’t be surprised if the ETH/BTC ratio breaks through 0.04 in January.
Conclusion
As we navigate the uncertain landscape of cryptocurrency investments, it’s essential to consider multiple perspectives. While some experts predict a lackluster performance for Ethereum in 2025, others foresee a bull run. Ultimately, investors must weigh their options carefully and make informed decisions based on their individual risk tolerance and investment goals.
Disclaimer
This article is intended for general information purposes only and should not be taken as legal or investment advice. The views expressed are the author’s alone and do not necessarily reflect those of Cointelegraph.
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