Those who have been keeping their fingers on the pulse of the crypto market for long enough know that Ethereum used to be hailed as a crypto powerhouse. It was praised as the pinnacle of blockchain innovation and the driving force of the decentralized finance (DeFi) movement, being expected to play a key role in the development of the Web3 ecosystem.
Outshined only by Bitcoin in terms of value and popularity, Ethereum has amassed a large and loyal community of supporters who strongly believe in its potential to revolutionize the world we live in. But recent developments have come to test their faith and shake their unwavering trust in the famous asset. Ethereum has lost 55% of its worth since the beginning of the year, and the descending trend could extend further into the future, as the ETH price prediction is looking rather gloomy.
Therefore, the chances that Ethereum might one day put an end to Bitcoin’s decade-long dominance are becoming ever more slim. The conversation has progressively shifted from Ethereum’s potential growth to its survival. That has caused many to wonder if we might be witnessing the downfall of a crypto giant in real time. Others are more tempered in their takes and see this as a transitory phase in Ethereum’s evolution.
Whatever the case might be, it’s worth taking a closer look at Ethereum’s current state and the factors behind its recent performance, or better said, underperformance.
High expectations, low results
Early in the year, most predictions placed Ethereum among the winners for 2025. Unfortunately, none of these forecasts materialized. After rising above $4K briefly last December and kindling hopes of a potential record high, Ethereum experienced a slight decline but remained in a comfortable range, entering 2025 at a solid value of $3,348.
What followed next was a gradual depreciation that caused Ethereum to lose most of the gains it had registered the previous year. Unable to find the stability and strength to return to former performances, the asset tumbled down under the $2K level. The ongoing fall saw Ethereum drop below $1,500, the lowest point in the year so far.
For the moment, Ethereum remains in a volatile stage, and there’s no certainty it will be able to go back above the $2K area anytime soon, let alone move towards a higher resistance point.
The broader economic context
Before diving into Ethereum’s inner dynamics and the potential faults we might find there, we should look at what’s happening around the asset because external factors are just as influential as internal ones. Unfortunately for Ethereum, the current economic context as of late is anything but favorable.
First of all, we have President Donald Trump’s tariff threats, which have caused a lot of turmoil in the financial sphere, also taking a toll on crypto prices. The total market capitalization of all crypto assets is also on a downward trend, in conjunction with the US stock selloff.
Major financial players are calling attention to the risk of recession getting higher. JPMorgan increased the likelihood of a recession this year from 30% to 40%. Similarly, Goldman Sachs also revised their risk projections, which have gone from 15% to 20%.
Present macroeconomic conditions are causing major headwinds and keeping the crypto market in a highly volatile state, reflecting negatively on Ethereum’s price performance. Although not all cryptocurrencies are impacted equally, Ethereum has been caught in a very bad patch, making it more vulnerable than other assets in its class.
The actions of the Ethereum Foundation
Ethereum’s performance is often analyzed in comparison with Bitcoin’s. While the crypto leader seems to be faring pretty well, the main altcoin is struggling to keep up, lagging further behind. This is causing the gap between Bitcoin and Ethereum to widen.
The negative correlation might highlight a major issue with Ethereum. Unlike its predecessor, which was created by an anonymous developer known as Satoshi Nakamoto, Ethereum was invented by the Russian-Canadian programmer Vitalik Buterin. Satoshi disappeared into thin air more than a decade ago, leaving Bitcoin to develop organically, but Buterin remains in charge of the blockchain’s development, being the main decision-maker of the Ethereum Foundation.
While there’s no doubt that Buterin wants to see his network thrive, the control he has over the platform raises centralization concerns. Some of the decisions that Buterin has taken over the years have caused controversies, with many wondering if the programmer is acting in Ethereum’s best interests. The problem that various analysts have pointed out is that Vitalik Buterin has too much influence over a crypto project that was meant to be a beacon of decentralization.
The numerous upgrades and improvements the network has been subjected to since its inception and how much they actually benefitted Ethereum also come into question. While these upgrades reflect Ethereum’s desire to innovate, it can sometimes feel like the project is more of an experiment than an established blockchain system looking to revolutionize the DeFi space. Therefore, the very thing that has earned Ethereum its laurels as a hub of innovation might be hurting its development now.
In the crypto community, some say that it might be better for Vitalik Buterin to take a page from Satoshi’s book and distance himself from Ethereum, arguing that without his constant involvement the crypto could catch up with the rest.
On the other hand, certain pundits are saying that the Pectra upgrade, might be able to solve many of Ethereum’s issues related to scalability, staking operations and processing capabilities, and bring the asset back on track. With Pectra being the biggest network upgrade since the Merge, many Ethereum supporters have their hopes tied around this milestone.
These are uncertain times for Ethereum and the crypto community as a whole. Then again, the crypto industry never really had long periods of peace or stability. This means that Ethereum is just as likely to continue its decline as it is to pick up the pace and finally emerge from the shadows.
