Ethereum has long been the backbone of decentralized innovation, powering DeFi, NFTs, and smart contracts across the blockchain landscape. But in 2024, despite a booming crypto market and major network upgrades, ETH’s price performance has raised eyebrows—and questions. While assets like Bitcoin and Solana surged, Ethereum lagged behind. So, what’s really going on?
Let’s dive into the key developments, analyze the data, and explore whether Ethereum is truly losing momentum—or if this is just a temporary dip in a much longer bullish journey.
Major Milestones for Ethereum in 2024
Despite its underwhelming price action, Ethereum achieved several critical milestones this year that strengthened its infrastructure and regulatory standing:
- March: Completion of the Dencun Upgrade
The highly anticipated Dencun upgrade went live, significantly reducing Layer 2 (L2) transaction fees through proto-danksharding. This innovation laid the groundwork for scalable, low-cost rollups, making Ethereum more accessible than ever. - June: SEC Closes Investigation into Ethereum 2.0
The U.S. Securities and Exchange Commission ended its inquiry into Ethereum’s proof-of-stake transition—without classifying ETH as a security. While staking regulations remain unclear, this decision removed a major overhang for institutional investors. - July: Approval of Spot Ethereum ETFs
Following Bitcoin's ETF success, the SEC approved multiple spot Ethereum ETFs. This marked a watershed moment for mainstream adoption, opening the door for traditional finance to gain direct exposure to ETH.
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Additionally, on-chain activity exploded in 2024. Data shows that transaction volume and active addresses on Ethereum increased nearly fourfold since January. Developer activity, protocol revenue, and stablecoin transfers all hit new highs—clear signs of robust ecosystem health.
Yet, despite these fundamentals, ETH’s price has only risen 14% year-to-date, trailing far behind Bitcoin (+45%) and Solana (+59%).
Why Is ETH Underperforming?
To understand the disconnect between strong fundamentals and weak price action, we need to examine two key factors: market perception and changing demand dynamics.
The ETH/BTC Ratio Hits Multi-Year Lows
One of the clearest indicators of ETH’s relative weakness is the ETH/BTC trading pair, which now hovers around 0.043—a near one-year low. This means it takes more ETH than ever to buy one Bitcoin, signaling declining investor confidence in Ethereum’s outperformance.
Even more telling is the SOL/ETH ratio, which recently hit an all-time high of 0.064. Solana’s surge, fueled by meme coin mania and high-speed transactions, has made it a speculative favorite—even as Ethereum maintains superior security and decentralization.
Declining Gas Demand and Inflationary Pressure
A core driver of ETH’s value is its role as digital oil—the fuel powering transactions on the network. But with the rise of Layer 2 solutions like Arbitrum, Optimism, and Base, most user activity now occurs off the mainnet.
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Transaction fees on these L2s are often 10x cheaper than on Ethereum mainnet. As a result:
- Gas consumption on L1 has dropped
- Burn rate of ETH (via EIP-1559) has slowed
- Net issuance turned slightly inflationary
For the first time since The Merge, Ethereum is no longer deflationary. When fewer tokens are burned and more are issued through staking rewards, supply pressure increases—putting downward pressure on price.
This shift mirrors a broader trend: the decoupling of network usage from native token demand. Users benefit from Ethereum’s security without directly interacting with ETH, creating what some call “liquidity fragmentation.”
Is Ethereum Losing Relevance?
Short answer: No—but competition is intensifying.
Solana’s rise exemplifies how speed and low fees can capture developer attention and retail hype. Meme coins like BONK and WIF exploded on Solana, drawing capital and attention away from Ethereum. Projects that might have launched on ETH a year ago are now considering alternatives.
However, Ethereum still dominates in:
- Total Value Locked (TVL) in DeFi
- NFT trading volume
- Institutional custody and compliance
- Developer mindshare
And with over 28% of all ETH staked (more than 33.6 million tokens), the network has deep economic security and long-term alignment among holders.
The Long-Term Outlook: Why Ethereum Still Matters
While short-term traders chase momentum plays like Solana, long-term investors should consider Ethereum’s enduring advantages:
- First-Mover Ecosystem Maturity
Ethereum hosts the most battle-tested protocols: Uniswap, Aave, MakerDAO, Lido. These platforms process billions in volume daily and are deeply integrated into global crypto finance. - Regulatory Clarity (Improving)
The SEC’s non-action stance on ETH and approval of ETFs signal growing acceptance of Ethereum as a commodity—not a security. - Institutional Inflows via ETFs
The real test begins now: will spot ETH ETFs see sustained inflows like Bitcoin ETFs did? Early data suggests cautious optimism. Once capital flows accelerate, they could reignite demand for ETH across DeFi, staking, and L2 ecosystems. - Sustainable Innovation Roadmap
Beyond Dencun, Ethereum continues advancing toward full sharding, Verkle trees, and further scalability upgrades—ensuring it remains competitive for years to come.
Frequently Asked Questions (FAQ)
Q: Has Ethereum become obsolete due to Layer 2s?
A: No. Layer 2s are built on top of Ethereum—they rely on its security and settlement layer. The growth of L2s strengthens Ethereum’s role as the “settlement hub” of crypto.
Q: Why is ETH inflationary now?
A: With lower gas usage on L1, fewer ETH are being burned via EIP-1559. Meanwhile, staking rewards continue to issue new supply. If burns fall below issuance, net inflation occurs—but this can reverse with higher usage.
Q: Are Ethereum ETFs a game-changer?
A: Yes. They provide regulated access for pensions, ETFs, and global investors who can’t use crypto exchanges. Sustained inflows could drive significant price appreciation.
Q: Should I invest in ETH or SOL?
A: It depends on your horizon. For short-term speculation, SOL offers higher volatility and narrative momentum. For long-term exposure to decentralized infrastructure, ETH remains the safer foundational bet.
Q: Can Ethereum regain its dominance?
A: Absolutely. Network upgrades, rising institutional adoption, and potential regulatory clarity position Ethereum for resurgence—especially if macro conditions improve.
Q: Is now a good time to buy ETH?
A: For long-term holders, dips present opportunities. With ETFs approved and staking yields attractive (~3–5%), accumulating ETH at current levels could pay off over 2–3 years—assuming continued ecosystem growth.
Final Thoughts: Patience Over Hype
Ethereum isn’t failing—it’s evolving. The narrative may favor flashy newcomers today, but structural strength often wins in the long run.
If you believe in decentralized finance, digital ownership, and programmable money, Ethereum remains the most credible foundation. Its challenges are real but solvable; its innovations are ongoing; its adoption is expanding.
So while Solana grabs headlines, don’t mistake momentum for permanence. The next bull cycle may reward those who held through the noise—not those who chased every shiny object.
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