Ethereum’s Darkest Hour: Rebound or Flash in the Pan?

Author: Isaac Olatunji; Source: Unsplash; Compiled by: Vernacular Blockchain

Unless you are isolated from the world, there is hardly anyone involved in crypto who has not noticed Ethereum's decline in the past few months. Price action, market dominance, and community sentiment - you name it, all are at historical lows! The top cryptocurrency seems to be falling sharply - it has not even set a new all-time high in this cycle. However, in the past few days, Ethereum seems to be rebounding. Why has it been sluggish for months? Can the current momentum drive it back?

Ethereum's Dilemma

Ethereum is struggling, there is no doubt about it. Since December 2024, whenever the market sentiment shift caused the overall crypto market to fall, only Bitcoin was able to rebound to the previous price and break through, while Ethereum was unable to return to the original point after the decline.

The following is Ethereum's market performance in recent months. In November 2024, the market was in an uptrend, with Bitcoin at around $96,405 and Ethereum at $3,703. On December 1, 2024, the market saw a slight decline, with Bitcoin falling to $93,557 and Ethereum falling to $3,337. Although both top cryptocurrencies reached important price levels later that month, they failed to maintain their gains and fell again.

About a month later, on January 1, 2025, Bitcoin was at $94,500, slightly higher than the previous month, while Ethereum fell further to $3,298. By February 1, price data showed a sharp drop in Bitcoin to $84,381 and Ethereum to $2,236. Bitcoin reached $102,000 later that month, but Ethereum failed to rebound to its previous highs. In fact, while Bitcoin rebounded from $84,381 in February to $94,304 in April, Ethereum continued to fall and was unable to retest its previous highs. In fact, the BTC/ETH ratio has widened, as shown in the chart data.

Source: CoinMarketCap

At press time, Ethereum is trading around $2,400, which is a decent gain considering its performance in recent months. However, it has yet to hit higher price ranges. What exactly is wrong with the Ethereum market? Let's analyze a few key points.

Bitcoin and Meme Coins Steal the Show

In recent months, Bitcoin and Meme Coins have stolen the show. You may have heard about the news that the US government is planning to set up a Bitcoin reserve. This plan is widely discussed among retail and institutional investors, and many US state governments are also moving forward to establish strategic Bitcoin reserves. Texas and New Hampshire have made progress in this regard, as have other US states and some other countries.

The interest of sovereign states has further attracted the attention of market whales and institutional investors. Recently, Michael Saylor announced that Strategy (formerly MicroStrategy) has purchased additional Bitcoin to consolidate its position as the public company with the largest Bitcoin holding. Strategy holds more than 555,000 Bitcoins out of the total supply of 21 million Bitcoins.

While Bitcoin has taken center stage and overshadowed Ethereum, meme coins are doing the same thing. Unfortunately, these meme coins are not launched on the Ethereum chain. One of the most successful meme coins in 2025, Fartcoin, with a market value of over $1 billion, was launched on the Solana chain. PumpFun, the popular meme token issuance platform, is also on Solana. You may not have noticed, but most of the hottest memeTokens created in late 2024 and 2025 came from PumpFun.

Source: CoinMarketCap

So Ethereum clearly missed the wave. In addition, there was a significant decrease in discussions about decentralized finance (DeFi) as no major innovations emerged. Overall, Ethereum was not at the center of any major craze - nothing was driving its price up.

Liquidity Flows to Sub-Networks

Ethereum’s high gas fees have been a major impediment to its growth. To make matters worse, the Ethereum network is flooded with Layer-2 networks like Polygon, Optimism, Base, Linea, Arbitrum, etc. These Layer-2 networks compete with Ethereum for liquidity. With the existence of USDC, these networks don’t need much ETH to complete operations. Not to mention that a variety of activities can be carried out on these Layer-2 platforms, so fewer transactions pass through the Ethereum main chain. Therefore, if the on-chain usage is high, the demand for ETH should have risen, but this is not the case now.

Competing Networks

We have already mentioned a little bit about how competitors like Solana can weaken Ethereum’s market dominance. The fact is that Solana provides a better experience for developers and users. Who wouldn’t want a faster, cheaper, and more powerful chain? According to CoinGecko’s report on Solana, the continued activity on the Solana chain reveals why it continues to attract more developers and retail investors. Here are some of the reasons that stand out:

Higher performance and scalability: Solana can process up to 3,000 transactions per second, and theoretically even up to 65,000 TPS. Regardless, Ethereum’s processing capacity of 15 transactions per second is completely unmatched. Considering Solana’s extremely low cost when processing large transactions, it’s obvious why developers prefer it. Active and helpful ecosystem: The Solana ecosystem provides developers with a wealth of resources and tools, which promotes its growth. The Solana ecosystem provides developer toolkits and funding opportunities, allowing new projects to emerge seamlessly. Similar to Solana, Avalanche is also growing in popularity and capabilities. Institutional adoption of these Layer-1 platforms will further weaken Ethereum’s dominance. Hyperliquid and Tron have made progress in perpetual futures trading and stablecoin markets, respectively.

Limited Institutional Interest

While global companies, market giants, and countries continue to accumulate Bitcoin, the situation is completely different for Ethereum. According to Coingecko data, there are very few public companies holding Ethereum, with a total value of less than $500 million, while the figure for Bitcoin is over $50 billion.

The crypto ETF market shows a huge gap between the demand for Bitcoin and Ethereum, with the latter failing to record high inflows like the former. ETF inflow data shows that Bitcoin has attracted a large number of large investors with its first-mover advantage and widely accepted store of value function. While Ethereum, despite recording billions of dollars in funds in spot ETFs, its figures are still far behind Bitcoin.

The hope of Ethereum: Will it make a comeback?

Ethereum needs an awakening to regain market dominance, attract widespread investment, and achieve a surge in value. At the time of writing, Ethereum has just activated an upgrade. This is a welcome development, but it does not solve the challenges of bridging assets and data in the Ethereum Layer-2 ecosystem. Competitors such as Solana still have an advantage because users can switch seamlessly between multiple decentralized applications (DApps). Nevertheless, the upgrade seems to have had a positive impact on the price of Ethereum, which has risen 20% in the past 24 hours to $2,400. Will this top alternative token make a comeback this time? We must wait and see how much improvement the recent upgrade can bring to the Ethereum chain, and whether this is enough to get ETH back on track!