Ethereum's Rebound: a flash in the pan or a turning point?

Recently, people in the cryptocurrency circle have been paying attention to the ongoing decline of Ethereum. From price performance to market dominance, and community sentiment, various indicators are at historical lows. This once top cryptocurrency seems to be experiencing a severe downturn, even failing to set a new historical high in this cycle. However, in the past few days, there have been signs of a rebound in Ethereum. So, what has caused its lackluster performance in recent months? Can the current rebound momentum be sustained?

The Dilemma of Ethereum

The market performance of Ethereum is indeed concerning. Since December 2024, whenever market sentiment shifts causing a downturn in the overall crypto market, Bitcoin always manages to rebound and break through previous highs, while Ethereum struggles to recover.

Reviewing the recent market performance of Ethereum: In November 2024, the market was in an upward phase, with Bitcoin priced at approximately $96,405 and Ethereum at $3,703. On December 1, 2024, the market saw a slight decline, with Bitcoin dropping to $93,557 and Ethereum falling to $3,337. Although both major cryptocurrencies reached significant price levels later in the month, they failed to maintain the upward momentum and fell back again.

On January 1, 2025, the price of Bitcoin was $94,500, slightly higher than the previous month, while Ethereum further declined to $3,298. By February 1, Bitcoin had dropped significantly to $84,381, and Ethereum fell to $2,236. Bitcoin touched $102,000 later in the month, but Ethereum failed to return to its previous highs. In fact, when Bitcoin rebounded from February's $84,381 to April's $94,304, Ethereum continued to decline, unable to test its previous high again. The BTC/ETH ratio continued to widen.

As of the time of writing, the trading price of Ethereum is around $2,400, which is a decent increase considering its performance in recent months. However, it has not yet hit higher price ranges. What issues is the Ethereum market facing? Let's analyze a few key points.

Bitcoin and meme coins seize market attention

In recent months, Bitcoin and Meme Coins have become the main characters in the market. News of the U.S. government's plan to establish a Bitcoin reserve has sparked widespread discussion among retail and institutional investors, and several U.S. state governments are actively promoting the construction of strategic Bitcoin reserves. Texas and New Hampshire have made progress in this regard, and other states and some countries are following suit.

The interests of sovereign countries have further attracted the attention of market giants and institutional investors. Strategy (formerly MicroStrategy) recently announced an increase in its Bitcoin holdings, solidifying its position as the publicly traded company with the most Bitcoin. Out of a total supply of 21 million Bitcoins, Strategy holds over 555,000.

At the same time, meme coins have diverted the market's attention. One of the most successful meme coins of 2025, Fartcoin, has a market capitalization of over $1 billion and was launched on the Solana chain. The popular meme coin issuance platform PumpFun has also chosen Solana. Most of the hottest meme tokens created at the end of 2024 and in 2025 come from PumpFun.

Therefore, Ethereum has clearly missed this wave of hype. Moreover, discussions about decentralized finance (DeFi) have also noticeably decreased due to a lack of significant innovations. Overall, Ethereum is not at the center of any major hotspots, lacking the momentum to drive its price up.

Transfer of Liquidity to Subnetworks

The high Gas fees of Ethereum have always been a major obstacle to its development. To make matters worse, the Ethereum network faces competition from Layer-2 networks such as Polygon, Optimism, Base, Linea, and Arbitrum. These Layer-2 networks compete with Ethereum for liquidity. With the presence of USDC, these networks can operate without needing too much Ether. Not to mention that various activities can be conducted on these Layer-2 platforms, resulting in a decrease in transactions through the Ethereum main chain. The demand for Ether, which should have increased with the rise in on-chain usage, has not materialized.

The Rise of Competing Networks

Competitors like Solana are undermining Ethereum's market dominance. Solana offers a superior experience for developers and users. Who wouldn't want to use a faster, cheaper, and more powerful chain? According to a report on Solana, the ongoing activity on the Solana chain reveals why it continues to attract more developers and retail investors:

1. Higher performance and scalability: Solana can process up to 3,000 transactions per second, theoretically even reaching 65,000 TPS, far exceeding Ethereum's processing capacity of 15 transactions per second. Considering Solana's extremely low costs when handling large transactions, it is clear why developers prefer it.

2. An active and helpful ecosystem: The Solana ecosystem provides developers with a wealth of resources and tools, facilitating its growth. Developer toolkits and funding opportunities enable new projects to emerge seamlessly.

Apart from Solana, Avalanche is also gaining popularity and capability. The institutional adoption of these Layer-1 platforms will further undermine the dominance of Ethereum. Hyperliquid and Tron have made progress in perpetual futures trading and the stablecoin market, respectively.

Limited Institutional Interest

While global companies, market giants, and countries are continuously accumulating Bitcoin, the situation for Ethereum is completely different. Data shows that there are very few publicly listed companies holding Ethereum, with a total value of less than 500 million dollars, while the corresponding number for Bitcoin exceeds 50 billion dollars.

The crypto ETF market also shows a significant gap between the demand for Bitcoin and Ethereum, with the latter failing to record high inflows like the former. ETF inflow data indicates that Bitcoin, with its first-mover advantage and widely accepted store of value function, has attracted a large number of significant investors. Although Ethereum recorded billions of dollars in inflows in the spot ETF, its numbers still lag far behind Bitcoin.

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

Ethereum needs a significant breakthrough to regain market dominance, attract widespread investment, and achieve a surge in value. Recently, Ethereum has just activated an upgrade. This is a welcome development, but it does not address the challenges of asset and data bridging in the Ethereum Layer-2 ecosystem. Competitors like Solana still hold an advantage, as users can seamlessly switch between multiple decentralized applications (DApps).

Despite this, the 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. Will this rebound last? We need to be patient and observe how much improvement the recent upgrade can bring to the Ethereum chain, and whether this is enough for ETH to get back on the competitive track.