- Macro backdrop: Crypto performance over 6–12 months typically tracks global liquidity, rate expectations, and risk appetite. As of late 2024, the trend was toward peaking global policy rates with an eventual easing bias. Equity risk appetite and USD strength/weakness remain important crosswinds for crypto beta.
- Market structure: Bitcoin often leads cycle turns; Ethereum tends to outperform later when risk rotates down the curve into smart-contract platforms, DeFi, and higher-beta assets. ETH/BTC ratio historically improves when on-chain activity and DeFi usage expand and when the narrative shifts to utility and yield.
- Ethereum fundamentals snapshot (as of late 2024 trends):
- Network upgrades: The Dencun upgrade (EIP-4844 “blobs”) materially lowered L2 data availability costs, enabling cheaper transactions on rollups. Roadmap attention moved toward Pectra (Prague + Electra) and continued rollup-centric scaling.
- Staking and supply: Post-Merge, ETH issuance is near-zero or deflationary during high on-chain activity due to EIP-1559 burns. The share of staked ETH had risen into the high-20s per cent range, creating a structural float reduction but concentrating risks (e.g., restaking and correlated validator behaviour).
- L2 ecosystem: TVL and activity concentrated increasingly on rollups; fee reduction bolstered consumer-facing apps, payments, and gaming use cases. Sequencer decentralisation and shared sorting/MEV reforms remain works-in-progress.
- ETFs and institutions (assumption note): By late 2024, the U.S. had advanced spot ETH ETF approvals to varying degrees; if live and gathering assets in 2025, that introduces consistent, transparent demand but also potential volatility from net flows.
- Competitive landscape: High-throughput L1S (e.g., Solana) and app-chains continued to compete on UX/cost. Ethereum’s counter is credible decentralisation, security, and a maturing L2 stack. Cross-chain liquidity and intent-based UX are chipping away at frictions.
Key factors influencing Ethereum’s price over the next 6–12 months: Technology and network developments
- Pectra roadmap and developer cadence:
- Account abstraction improvements (e.g., EIP-7702 direction) could enable smoother wallet UX and real-world commerce flows.
- Improvements to proposer-builder separation (PBS), MEV mitigation, and possibly enshrined/standardised components for rollups would enhance reliability and security, supporting institutional comfort.
- Any delays or security incidents around upgrades are downside risks.
- Rollup economics and throughput:
- Sustained low L2 costs, rising throughput, and progress on data availability (e.g., blob markets maturing) support usage growth. Cheaper transactions expand addressable markets (payments, gaming, micro-commerce).
- Sequencer decentralisation and shared sequencing are important for credible neutrality—positive if achieved; negative if delayed.
- Restaking and validator economics:
- EigenLayer’s growth underscores demand for “ETH as security.” If restaking rewards persist without major slashing or correlation events, ETH’s “productive asset” narrative strengthens. Conversely, an AVS incident or correlated slashing could dent confidence and price.
Regulatory and policy
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