Ethereum’s Strong Performance Across the Board Except in Price
2024 has been a year filled with significant developments for Ethereum, setting the stage for what could have been a standout year for the cryptocurrency. The Ethereum Dencun upgrade in March went off without a hitch, marking a milestone for the platform. In an unexpected turn of events, Spot ETFs for Ethereum were approved in the U.S. in May, a move that few had anticipated. Furthermore, a pivotal shift in crypto policy paved the way for the approval of FIT21 and the repeal of SAB 121, promising positive outcomes for the sector as a whole. The SEC’s closure of its investigation into Ethereum 2.0 in June added to the positive momentum surrounding the cryptocurrency.
Despite these favorable developments, Ethereum’s performance has been lackluster, with the asset seeing only an 11% increase in 2024. In contrast, BTC has surged by 36% and SOL by 40%. Notably, Ethereum was one of the worst-performing assets during a recent market sell-off and has shown the least rebound from the bottom, according to researcher Ceteris.
Activity on Layer 2 solutions has seen a fourfold increase since the beginning of the year, as reported by L2Beat. Additionally, BlackRock, the world’s largest asset manager, ventured into Ethereum by launching a fund on the platform.
Ethereum’s underwhelming performance is evident in the ETH/BTC ratio, which has dropped to its lowest point since April 2021, currently standing at 0.045. Meanwhile, SOL has been making significant gains, with the SOL/ETH ratio rising by 13% in the last day and reaching all-time highs.
On a recent episode of Unchained, Arca’s CIO Jeff Dorman expressed surprise at Ethereum’s failure to meet expectations in 2024. Despite positive developments such as the approval of Ethereum spot ETFs and favorable shifts in U.S. crypto policy, Ethereum has not performed as well as anticipated. Dorman highlighted May as a crucial month for U.S. crypto policy, emphasizing the importance of regulatory changes and ETF inflows. Despite these positive shifts, Ethereum has struggled to keep pace with its counterparts, a trend that Dorman finds remarkably unexpected.
The recent market sell-off has further compounded Ethereum’s challenges, with factors like the unwinding of the Japanese Yen carry trade and a substantial $600 million ETH selloff by Jump Trading contributing to negative sentiment. A CryptoQuant report revealed a significant shift in market sentiment, with traders in crypto futures markets closing long positions aggressively. This resulted in a notable decrease in open interest in Bitcoin and Ethereum futures markets, accompanied by a negative funding rate favoring short positions over long ones.
