Can Ethereum regain its former glory?

Recently, the focus of the cryptocurrency market has almost entirely been on the performance of Ethereum. This once market leader has fallen to historical lows in terms of price trends, market share, and community atmosphere. However, in the past few days, Ethereum seems to be showing signs of a rebound. So, what has caused its prolonged underperformance? Can the current upward momentum be sustained?

The Predicament of Ethereum

The market performance of Ethereum is indeed concerning. Since the end of 2024, whenever market sentiment fluctuates leading to an overall decline in cryptocurrencies, Bitcoin has always been able to quickly recover and reach new highs, while Ethereum struggles to return to its previous price levels.

Looking back at Ethereum's market performance in recent months, we can see a clear downward trend. In November 2024, the market was in an ascending channel, with Bitcoin and Ethereum reaching $96,405 and $3,703 respectively. However, by February 2025, although Bitcoin also experienced a pullback, it quickly rebounded to a new high of $102,000. In contrast, Ethereum continued to decline and failed to retest its previous highs.

As of now, the trading price of Ethereum is about $2,400. Considering its recent performance, this is a decent increase. However, it has not yet broken through higher price ranges. So, what exactly are the reasons for the sluggishness in the Ethereum market? Let's delve into a few key factors.

The Halo Effect of Bitcoin and Popular Tokens

In recent months, Bitcoin and some popular tokens have become the focus of the market. The news that the U.S. government plans to establish Bitcoin reserves has sparked widespread discussion, and several state governments have also begun to work on establishing strategic Bitcoin reserves. These developments have attracted the attention of a large number of institutional investors.

At the same time, some popular tokens are also seizing market share. One of the most successful tokens of 2025, Fartcoin, with a market value of over $1 billion, was launched on another blockchain. Many emerging popular tokens have also chosen other platforms as their issuance base.

In contrast, Ethereum seems to have missed this wave of enthusiasm. Moreover, innovations in the decentralized finance (DeFi) sector have also slowed down, lacking significant breakthroughs that could drive up the price of Ethereum.

Liquidity Distributed to Layer Two Networks

The high Gas fees issue that Ethereum has faced for a long time has been a major obstacle to its growth. Even more challenging is the emergence of numerous layer two network solutions on the Ethereum network, such as Polygon, Optimism, Base, Linea, and Arbitrum. These layer two networks compete with the Ethereum mainnet for liquidity. Due to the existence of stablecoins, these networks can operate without requiring a large amount of ETH. Moreover, these layer two platforms support a variety of activities, reducing reliance on the Ethereum mainnet. Therefore, even with an increase in on-chain activity, the demand for ETH has not risen correspondingly.

The Rise of Competing Networks

Some competing blockchains are encroaching on Ethereum's market share. These emerging platforms provide developers and users with a higher quality experience, featuring faster speeds, lower costs, and more powerful functionalities. These attributes are attracting an increasing number of developers and ordinary investors.

For example, some competing chains can handle up to 3,000 transactions per second, theoretically even reaching 65,000 TPS, far surpassing Ethereum's processing capability of 15 transactions per second. Considering the extremely low cost of processing large transactions, developers are more inclined to choose these emerging platforms.

In addition, these competing networks also provide developers with abundant resources and tools, including developer toolkits and funding opportunities, further promoting the prosperity of the ecosystem.

Limited Institutional Investment Interest

Unlike Bitcoin, Ethereum seems to have failed to attract widespread interest from institutional investors. Data shows that there are very few publicly traded companies holding Ethereum, with a total value of less than $500 million, whereas the figure for Bitcoin exceeds $50 billion.

The data from the cryptocurrency ETF market also reflects the significant gap between the demand for Bitcoin and Ethereum. Although Ethereum spot ETFs have also attracted billions of dollars in inflows, their scale still lags far behind that of Bitcoin ETFs.

The Future of Ethereum: Can It Make a Comeback?

Ethereum urgently needs a major breakthrough to regain market dominance, attract widespread investment, and achieve a surge in value. Recently, Ethereum has just completed a network upgrade. This is undoubtedly a positive development, but it is still insufficient to address the challenges of asset and data bridging in the Ethereum Layer 2 ecosystem.

Nevertheless, this upgrade seems to have a positive impact on the price of Ethereum. In the past 24 hours, the price of Ethereum has risen by 20%, reaching $2,400. Does this mean that Ethereum is about to return to its peak? We need to be patient and observe how much improvement the recent upgrade can bring to Ethereum, and whether this is enough for ETH to regain market favor.