Key Points
- Ethereum’s long-term positioning remains strong despite underperforming against Bitcoin and other altcoins.
- Spot Ethereum ETFs have potential for upside surprises according to a recent report.
Ethereum (ETH), the world’s second-largest cryptocurrency, has not been performing as strongly as Bitcoin and other altcoins. Despite this, a recent report suggests that Ethereum’s long-term position is stable and could surprise investors with a positive turn.
Although Ethereum has only seen a 29% increase in its market value this year compared to Bitcoin’s 50% surge, the report suggests that Ethereum could outperform expectations in the coming months.
Ethereum’s Potential
The report also noted that Ethereum currently doesn’t have significant supply-side overhangs, such as pressure from miner selling or token unlocks. According to David Han, an analyst, Ethereum’s role as the center of decentralized finance (DeFi) is unlikely to be displaced due to the widespread adoption of the Ethereum Virtual Machine (EVM) and its layer 2 innovations.
The EVM is the core processing system of the Ethereum blockchain, allowing developers to create smart contracts and nodes to interact with them. Layer 2s are independent blockchains built on top of layer 1s (the base layer), designed to alleviate scaling and data bottlenecks.
Spot Ethereum ETFs
The report also highlighted the potential of spot Ethereum ETFs. The market may be underestimating the odds and timing of a potential approval, leaving room for upside surprises.
The first deadline for the approval of spot Ethereum ETFs is next week, on May 23. However, many market analysts have stated that the chances of such an approval seem slim at this point. Some believe that US spot Ethereum ETFs won’t come until the end of 2025.
Despite this, the report suggests that even if the first deadline encounters a rejection, there is a high likelihood that litigation could reverse that decision. In the meantime, the structural demand drivers for Ethereum, as well as the technological innovations within its ecosystem, will enable it to continue straddling across multiple narratives.
