Ethereum has lagged behind both Bitcoin and Solana in price in recent months, but experts suggest that this trend could soon change.
Despite Ethereum’s significant technological advances and growing institutional interest, its price growth has not matched the impressive increases seen by its peers.
According to an investment simulator from 21Shares, Bitcoin and Solana have both increased by 38% since the beginning of the year, while ETH has only gained 15%. This discrepancy raises questions about ETH’s current market position and future prospects.
Yves Longchamp, managing director and head of research at AMINA, a crypto bank, said Ethereum’s distinct role in the crypto ecosystem means its price performance should be evaluated separately from Bitcoin and Solana. He noted that Ethereum’s value proposition is different from Bitcoin because it serves a variety of use cases beyond being a mere store of value.
Longchamp attributed the price increases in Bitcoin and Solana to recent market developments, including the launch of spot Bitcoin ETFs and the broader memecoin trend. Since January, spot Bitcoin ETFs from major financial institutions like BlackRock and Fidelity have attracted more than $20 billion in investments, according to Farside Investors. Bitcoin’s reputation as “digital gold” has supported its price, though that narrative is still evolving.
In contrast, ETH is often described as “digital oil” by Tres Finance CEO Tal Zackon. Zackon explained that the price of ETH reflects the cost of using the Ethereum network, which serves as a utility currency for future financial workflows. As Ethereum transitions from a proof-of-work model to a more environmentally friendly proof-of-stake model, and billions are now staked via liquid staking protocols, the focus has shifted to the operational efficiency of the network and transaction costs.
Historically, Ethereum has struggled with slow and expensive transactions, most notably during the 2017 CryptoKitties craze. However, recent developments have alleviated these issues. On August 11, the average transaction cost on Ethereum reached its lowest point in years, thanks in part to the proliferation of layer 2 networks that offload transaction activity from the main chain. This development has contributed to a relatively stable ETH price by reducing network load and gas fees.
Longchamp sees this stability as a positive sign, suggesting that decreasing transaction costs and increasing efficiency are a good reflection of Ethereum’s technical progress. He believes that upcoming events like the Fed’s September meeting could act as a catalyst for ETH’s price increase.
Additionally, Solo Ceesay, CEO of crypto wallet Calaxy, predicts that increased investment in spot Ethereum ETFs will support the ETH price. Investors shifted their focus to spot ETH ETFs during the market crash on August 5, leading to a capital influx into Ethereum as they pulled back from Bitcoin ETFs. Ceesay notes that ETH’s performance is closely tied to Bitcoin’s, and positive developments for Bitcoin could also benefit ETH.
*This is not investment advice.