Ethereum’s Ether Has Fallen Out of Investor Favor and How

As a seasoned crypto investor with a knack for deciphering market trends and fundamentals, I find myself increasingly concerned about Ethereum (ETH). Despite its past glory as the “shiny silver” to Bitcoin’s gold, ETH has been struggling this year, with a mere 36% rise compared to BTC‘s impressive 109%.

This year, Ethereum’s ether (ETH) has seen a growth of just 36%, which is notably lower compared to bitcoin’s (BTC) striking increase of 109%. In other words, while ETH was previously perceived as the ‘silver’ to BTC’s ‘gold’, it has not kept pace with Bitcoin’s impressive advancement this year.

Investors remain hesitant about Ethereum (ETH), as its current market value of $3,100 is significantly lower than its all-time high in 2021 of $4,832. In contrast, Bitcoin (BTC) has reached new heights, trading above $90,000.

Ethereum’s performance is expected to remain sluggish compared to other cryptocurrencies, such as gold, for the remainder of the year. According to Amberdata’s latest research, there’s only a 10% possibility that Ether will surpass its first-quarter high of approximately $4,000. Meanwhile, traders are optimistic about Bitcoin and anticipate it reaching new heights above $100,000.

The graph presents the Probability Density Function (PDF) and Cumulative Distribution Function (CDF), emphasizing the likelihood that Ether will trade at diverse price points across multiple periods, sourced from options trading for Ether on the leading cryptocurrency options platform, Deribit.

A higher mountain (or peak) in terms of price suggests a higher likelihood of the price reaching that amount, and conversely, a lower mountain or peak indicates a lower likelihood of the price reaching that amount.

Currently, at this moment, only about 10% of traders believe that ether will surpass $4,000 by December 27th. This indicates that the anticipated regulatory changes favoring decentralized finance and other cryptocurrencies, which were expected during Trump’s presidency, have not significantly sparked investor interest in ETH yet, despite causing a stir among DeFi coins.

Amberdata attributes ETH’s dour outlook to weak fundamentals.

As a researcher, I find myself highlighting a significant challenge for Ethereum (ETH): the initial value proposition of “sound money” – characterized by its deflationary supply due to transaction fee burn – has reversed to one of inflation, given that nearly all decentralized finance (DeFi) transactions are now being conducted on Layer 2 solutions instead of ETH’s Layer 1. In my latest newsletter to clients, I expressed my belief that this trend is contributing significantly to the downward pressure on ETH prices.

As an analyst, I observe that if Bitcoin continues its upward trajectory at an accelerated pace, it might propel Ethereum over the $4,000 mark, regardless of Ethereum’s intrinsic values. However, this growth spurt could potentially keep Ethereum lagging behind Bitcoin in terms of performance.