Ethereum’s Recent Underperformance Disappoints Investors
Ethereum’s recent performance has been lackluster, leaving investors disappointed. Geoff Kendrick, head of digital asset research at Standard Chartered Bank, believes that Ethereum is undergoing a “mid-life crisis,” while Kaiko research analyst Adam McCarthy bluntly states that Ethereum is no longer appealing to most people.
(Background: Arthur Hayes predicts: Ethereum will break through $5000, SOL will subsequently stand at $300)
(Contextual Supplement: Is nobody using Ethereum? Daily burn rates hit a new low as it becomes a “hyperinflation asset,” with ETH active addresses dipping to a six-month low)
Significant Price Decline
In the past three months, Ethereum, the world’s second-largest cryptocurrency, has seen its price plummet by 40%. Its performance has fallen short compared to other major cryptocurrencies such as Bitcoin, Solana, and Cardano, highlighting Ethereum’s waning popularity.
The Financial Times reports that Carol Alexander, a finance professor at the University of Sussex in the UK, analyzes that the vision for DeFi now appears more distant than it did a year ago; as people’s perspectives become clearer, their sense of disillusionment grows stronger.
The recent meme coin craze has further diminished Ethereum’s visibility. Tokens promoted by figures such as U.S. President Trump and Argentine President Milei have opted for Solana. Over the past six months, meme coin trading on Solana has generated $721 million in transaction fees for its users, nearly approaching Ethereum’s $824 million level.
Declining Attractiveness
Kaiko research analyst Adam McCarthy states that Ethereum is no longer appealing to most people. With so many competitors vying for attention in the economic landscape, relying solely on remarkable engineering achievements fails to generate much excitement. In contrast, Bitcoin’s narrative as digital gold firmly captures public interest, while Ethereum struggles to maintain its allure in its native space, and ETF inflows indicate a lack of broad appeal.
Carol Alexander points out that the activity of many DeFi projects using Ethereum is often exaggerated, as many transactions are counted multiple times. Additionally, the Ethereum Foundation, responsible for Ethereum’s development, is experiencing fragmentation, with developers debating the future direction of the project, leading to a somewhat chaotic decision-making process.
Mid-Life Crisis for Ethereum
Geoff Kendrick from Standard Chartered Bank also believes that Ethereum is in a “mid-life crisis,” as it faces numerous challenges while undertaking a series of technological upgrades aimed at attracting a broader user base.
Ethereum developers have been striving to enhance network speed and efficiency by offloading transaction processing to third parties. However, this shift has transferred costs to third-party networks, namely Layer 2 networks, undermining Ethereum’s inherent value. Geoff Kendrick candidly states that this decision undoubtedly relinquishes value, effectively commodifying Ethereum.
Supporters of Ethereum argue that it boasts the most mature developer community, with prominent advocates, including co-founder Vitalik Buterin, dedicated to building a new network to help Ethereum meet the demands of large-scale transactions.
Simon Forster, co-head of digital assets at brokerage firm TP ICAP, asserts that Ethereum is increasingly resembling one of many speculative crypto projects:
“It is becoming more difficult to market. No one knows which of these decentralized networks will ultimately dominate.”
