Was the Ethereum rally a flash in the pan?

By Isaac Olatunji

Compiler: Unless vernacular blockchains

are isolated, there is hardly anyone in crypto who hasn't noticed Ethereum's decline over the past few months. Price action, market dominance, and community sentiment – name it, it's all at all-time lows! The top cryptocurrency seems to be falling sharply – the cycle hasn't even hit new all-time highs. However, over the past few days, Ethereum seems to be rebounding. Why has it been sluggish for months? Can the current momentum push it back?

Ethereum's dilemma

Ethereum is struggling, there's no doubt about it. Since December 2024, whenever a shift in market sentiment has led to a decline in the crypto market as a whole, only Bitcoin has been able to rebound to its previous level and break through, while Ethereum has barely been able to return to square one after falling.

Here's how Ethereum has performed in recent months. In November 2024, the market is in an upward phase, with the price of 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 significant levels later in the month, they failed to maintain their rally and fell again.

About a month later, on January 1, 2025, the price of Bitcoin was $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 in the month, but Ethereum failed to rebound to its previous highs. Indeed, when Bitcoin recovered 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 expanded, as shown in the chart data.

: CoinMarketCap

As of press time, Ethereum is trading at around $2,400, which is a decent increase considering its performance in recent months. However, it has yet to hit the higher price range. What's wrong with the Ethereum market? Let's break down a few key points.

Bitcoin and meme coins steal the limelight

In recent months, Bitcoin and Meme Coins have stolen the show. You may have heard the news that the U.S. government plans to set up a Bitcoin reserve. The plan is widely discussed among retail and institutional investors, and many U.S. state governments are also working on building strategic bitcoin reserves. Texas and New Hampshire have made progress in this regard, as have other states in the United States, as well as some other countries.

The interest of sovereigns has further attracted the attention of whales and institutional investors. Recently, Michael Saylor announced that Strategy (formerly MicroStrategy) had made additional purchases of Bitcoin to cement its position as the public company with the largest Bitcoin holdings. Out of the total supply of 21 million BTC, Strategy holds more than 555,000 BTC.

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

: CoinMarketCap

As a result, Ethereum has clearly missed out on this wave of craze. In addition, the discussion about decentralized finance (DeFi) has also decreased significantly, as no major innovations have emerged. Overall, Ethereum isn't at the center of any major boom – there's nothing to drive its price up.

for liquidity flowing to the sub-network

Ethereum have been a major obstacle to its growth. To make matters worse, the Ethereum network is flooded with Layer-2 networks such as Polygon, Optimism, Base, Linea, Arbitrum, and more. These Layer-2 networks compete with Ethereum for liquidity. With the presence of USDC, these networks don't need much ETH to get things done. Not to mention the multiple activities that can take place on these Layer-2 platforms, so there are fewer transactions through the Ethereum main chain. So, if on-chain usage was high, the demand for ETH should have risen, but this is not the case now.

Competing networks

: We've mentioned a little how competitors like Solana can erode Ethereum's market dominance. The truth is that Solana provides a better experience for both developers and users. Who doesn't want a faster, cheaper, and more powerful chain? According to CoinGecko's report on Solana, the ongoing activity on the Solana chain reveals why it continues to attract more developers and retail investors. Here are some of the standout reasons:

Higher performance and scalability: Solana can process up to 3,000 transactions per second, and theoretically even up to 65,000 TPS. In any case, Ethereum's processing power of 15 transactions per second is completely unmatched. Considering Solana's extremely low cost of processing large transactions, it's easy to see why developers prefer it. Active and helpful ecosystem: The Solana ecosystem provides developers with a wealth of resources and tools to facilitate their growth. The Solana ecosystem provides developer toolkits and funding opportunities that enable new projects to emerge seamlessly. Similar to Solana, Avalanche is also growing in popularity and capabilities. The institutional adoption of these Layer-1 platforms will further erode Ethereum's dominance. Hyperliquid and Tron have made inroads in perpetual futures trading and stablecoin markets, respectively.

While

global companies, market players, and countries continue to accumulate Bitcoin, the situation with Ethereum is very different. According to CoinGecko data, there are very few publicly traded companies that hold Ethereum, with a total value of less than $500 million, compared to more than $50 billion for Bitcoin.

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

Ethereum's hope: will it make a comeback?

Ethereum needs an awakening to regain market dominance, attract widespread investment, and soar 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 asset and data bridging in the Ethereum Layer-2 ecosystem. Competitors such as Solana still have an advantage, as users can seamlessly switch between multiple decentralized applications (DApps). Despite this, the upgrade seems to have had a positive impact on the price of Ethereum, which has increased by 20% to $2,400 in the last 24 hours. Will this top-tier token make a comeback this time? We'll have to be patient and see how much the recent upgrade will improve the Ethereum chain and whether that will be enough to get ETH back on track.