Can Ethereum return to greatness?

Ethereum's price has fallen more than 50% from its all-time high, while its returns are quite far from Bitcoin. Unlike in the past, where returns were close, even with spot ETFs, we delve into why Ethereum underperformed and what we believe will make it come back.

The Downturn of dApps

Since the heyday of dApps such as DeFi, GameFi, Metaverse, and NFT in 2020-2021 until now, their popularity has declined significantly. During that time, these dApps used the Ethereum chain for development. As the popularity of these dApps declines, the demand for using the Ethereum chain has also decreased.

The emergence of a new generation of blockchains

Another important reason is that since 2020, there have been many new Blockchain Layer 1s such as Solana, BNB Chain, SUI, etc. The highlight of this new chain is the speed of transactions, lower fees, and funding to support new developers, causing the Ethereum chain to have a considerable market share.

Institutional investors still don't understand Ethereum well enough

          The reason why the Spot Ethereum ETF can generate lower returns than the Spot Bitcoin ETF may be because institutional investors, who are the main target group, may not understand the properties of Ethereum as much as Bitcoin, which most people understand that it has the properties of a store of value. However, Ethereum has a more diverse and difficult-to-understand use case, so institutional investors do not invest in ETFs as much.

Internal issues within the Ethereum Foundation

Internal conflicts within the Ethereum Foundation, particularly over Vitalik Buterin's role, are among the reasons investors are losing confidence in Ethereum.

While the reasons why Ethereum could return to similar levels of returns as Bitcoin are due to financial institutions still believing

Despite the emergence of many new blockchains, the Ethereum chain has gained more trust from financial institutions than other chains for institutional applications such as stablecoins and asset tokenization. If its usage grows, it will have a positive impact on the value of the coin.

Real World Asset is the driving force

RWA or Real World Asset, which is the transformation of traditional financial market assets into digital tokens, is a trend with high growth potential in the future. Ethereum is still the chain with the highest market share, which should be a positive factor for Ethereum.

Ethereum Spot ETF Evolution

When the previous Ethereum spot ETF was approved by the US SEC, the staking feature was removed. However, it is highly likely that the new SEC will change its mind and approve the feature after private parties submit another request, which will greatly increase the appeal of the Ethereum spot ETF.

Upcoming upgrades

          Ethereum is constantly getting new upgrades, the latest of which is coming in March with the Pectra version. There will be more upgrades coming that will address the issue of higher fees compared to other chains and higher transaction speeds that will allow the chain to continue to grow in usage.

However, these factors are only fundamental factors. Whether the value will increase or decrease, there are other factors to consider such as market conditions, macroeconomics, etc. Investors must consider all opportunities and risks.