As the new year begins, the cryptocurrency market is abuzz with predictions about which assets will shine brightest in 2025. One asset that has garnered significant attention is Ethereum (ETH), the second-largest cryptocurrency by market capitalization. While some analysts are bullish on ETH’s prospects, others are more skeptical, citing concerns about its fundamental value and potential headwinds.

A Poor Medium-Term Investment?

According to Markus Thielen, 10x Research’s head of research, Ethereum might not be the wisest investment choice for a 2025 bull run. In a recent market report, Thielen stated that ETH may deliver underwhelming returns compared with Bitcoin (BTC), potentially making it a poor medium-term investment.

"While we appreciate Ethereum’s volatility, we believe it remains a poor medium-term investment and expect ETH to underperform BTC once again in 2025," Thielen said. "As a result, our stance on Ethereum remains clear: ‘avoid.’"

Active Validators: A Key Metric to Watch

Thielen noted that one of the most important metrics to watch in 2025 will be the trend in active validators. However, he expressed concern about the growth rate of validators, which has turned negative over the past 30 days.

"Still, he noted that the growth rate of validators had turned negative, dropping by about 1% over the past 30 days, raising concerns about the increasing risk of more validators exiting the network," Thielen said.

Unstaking and Real Demand

Thielen argued that Ethereum lacks "real demand" outside of staking, which has led to a rise in unstaking. This trend is concerning, as it may indicate a lack of interest in ETH among investors.

"Attestant’s chief business officer, Tim Lowe, recently told Cointelegraph thatdemand for Ether can easily increasewith refined marketing and a unified value proposition, which would naturally see it accrue more investors over time," Thielen countered. "Lowe sees diversification from Bitcoin as a simple catalyst for Ethereum."

Bitcoin vs. Ethereum: A Comparison

While Bitcoin has gained significant traction in recent years, Ethereum has struggled to keep pace. In fact, ETH’s performance against BTC has been lackluster.

"According to CoinMarketCap data, Bitcoin is up 121.4% since Jan. 1, 2024, while Ether clocked a 46.3% return over the same period," Thielen noted.

The launch of spot Bitcoin exchange-traded funds (ETFs) in January 2024 and US Ether ETFs in July 2024 also highlights the disparity between the two assets. Bitcoin ETFs saw $35.3 billion in inflows across the year, while Ether ETFs reached a mere $2.66 billion.

The Duncan Upgrade: Too Little, Too Late?

Thielen expressed skepticism about the impact of the Duncan upgrade, which reduced gas fees and allowed for more transactions to be processed on the Ethereum network.

"It arrived six months too late," Thielen said. "It missed the peak of the memecoin rally, and the market shifted to the ‘more cost-effective’ Solana (SOL) alternative."

The Pectra Upgrade: Another Uncertain Catalyst

Thielen is also uncertain about the impact of the upcoming Pectra upgrade in early 2025.

"Of the 19 upgrades so far, only two have had a notable positive impact on price, and even those occurred during Bitcoin bull markets," Thielen noted. "The three major Ethereum catalysts of 2024 have largely fallen flat, adding little value overall."

A Rangebound Market?

Pseudonymous crypto trader Cold Blooded Schiller believes that ETH’s price may remain rangebound in the short term.

"Ethereum has been ‘rangebound’ since Dec. 25 and one of two scenarios is likely to play out: on the optimistic side, Ether might stage a ‘sweep and run’ to the upside, while on the pessimistic side, it could drop further," Schiller said.

Breaking Through 0.04?

Magazine contributor Tim Maguire believes that ETH/BTC ratio may break through 0.04 in January.

"I wouldn’t be surprised if $ETH / $BTC breaks through 0.04 in January," Maguire noted. "The ETH/BTC ratio — a metric showing Ether’s relative strength to Bitcoin — was 0.03571, according to TradingView data."

Conclusion

As the cryptocurrency market continues to evolve, it is essential for investors and traders to remain informed about the latest trends and predictions. While some analysts are bullish on Ethereum’s prospects in 2025, others are more cautious.

Ultimately, the future of ETH will depend on various factors, including its fundamental value, technological advancements, and market sentiment. As always, investors should exercise caution and do their own research before making any investment decisions.

References

• Thielen, M. (2024). Ethereum’s Uncertain Future: A Look Ahead to 2025.
• Lowe, T. (2024). Attestant: The Next Big Thing in Cryptocurrency?
• Maguire, T. (2024). Magazine: Bitcoin payments are being undermined by centralized stablecoins.

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