Ethereum, often considered the beacon of crypto adoption after Bitcoin, has been the backbone of the decentralised finance (DeFi) revolution. It has been the engine powering a vast array of smart contracts and decentralised applications (dApps). This is in line with its original philosophy and aim of becoming the World Computer — a universal network on thousands of computers enabling people to build decentralised applications. 


However, for those who have been closely following the markets, it is no secret that Ethereum (ETH) has been underperforming, particularly since September 2022. To state a fact, it has not crossed its all-time high of $4,700 which it touched in 2021 while Bitcoin has put in new highs in 2024. Ethereum has been underperforming Bitcoin since its Merge event and this has raised concerns among seasoned and new investors.

Is Ethereum still a worthy investment? And how should ETH holders navigate this downtrend? Let us delve into the Ethereum ecosystem and explore whether investors should remain optimistic or cautious.


Current State of Ethereum: A Temporary Decline?


Before diving into the future, let us address the elephant in the room: Ethereum’s decline relative to Bitcoin. After the much-anticipated ‘Merge’ in September 2022, where Ethereum transitioned from a Proof of Work (PoW) to a Proof of Stake (PoS) consensus mechanism, many expected ETH to surge.


This transition was revolutionary and reduced the network's energy consumption by over 99 per cent and made it more scalable. However, the market reaction was underwhelming. Since the Merge, Ethereum has been on a macro downtrend, struggling to regain its previous highs and steadily losing ground against Bitcoin.


However, this underperformance must be viewed in a broader context. First, it is important to remember that market cycles are common in both traditional and crypto markets. Just as stocks have periods of underperformance before rallying, Ethereum's recent struggles might not necessarily signify long-term decline.


Many analysts argue that Ethereum’s current challenges are more macroeconomic than intrinsic to the project itself. Interest rate hikes, economic uncertainty, and broader market sell-offs have contributed to the downturn across the board, impacting Ethereum just as they have Bitcoin and other assets.


Key Indicators for Ethereum's Future Growth


Despite Ethereum's recent underperformance, several factors suggest that the ecosystem is still ripe for long-term growth. A careful examination of the following indicators can help investors decide whether Ethereum remains a solid investment.


Network Activity and Usage


One of the biggest indicators of Ethereum’s potential is its network activity. Ethereum remains the leading platform for DeFi applications, non-fungible tokens (NFTs), and dApps. Despite its price decline, the network continues to host thousands of dApps with billions of dollars locked in DeFi protocols. This continued use suggests that Ethereum’s fundamentals are strong, even if its price doesn't reflect it right now.

Post-Merge Staking and Yield


With Ethereum’s shift to Proof of Stake, investors now have the ability to stake their ETH, earning yields by securing the network. As of now, over 30 million ETH is staked, a strong vote of confidence in the protocol. However, this staking comes with liquidity concerns. Stakers need to lock up their ETH for extended periods, which can limit supply in the short term.


For investors looking at the long game, staking rewards add another layer of potential return beyond mere price appreciation.


Layer 2 Scaling Solutions


Ethereum has faced criticism for its high gas fees and slow transaction speeds during periods of high demand. However, significant progress is being made with Layer-2 scaling solutions such as Optimism, Arbitrum, and zk-rollups. These solutions aim to make transactions faster and cheaper while maintaining Ethereum’s security. 


What Should ETH Holders Do Now?


In times of market uncertainty, it is easy for investors to become swayed by fear and emotion. But as any seasoned investor knows, downturns often present opportunities for accumulation. So, how should ETH holders navigate this current market?


Patience is Key


Ethereum’s fundamentals remain strong. Its underperformance against Bitcoin, while concerning in the short term, does not necessarily reflect its long-term potential. If you believe in Ethereum’s role in the future of decentralised applications, NFTs, and DeFi, then staying the course could be a sound strategy.


Diversify, But Don’t Panic


While holding ETH, consider diversifying your portfolio. Bitcoin has traditionally been seen as the ‘store of value,’ while Ethereum is the ‘utility’ play. Having exposure to both can balance risk. However, selling ETH out of panic might cause missing out on future growth when the market turns bullish.


Monitor Staking Opportunities


If you are holding large amounts of ETH, consider staking a portion of your assets to earn passive income. The yields from staking, especially over time, can soften the blow of short-term price fluctuations.


Is Ethereum Still a Good Investment?


In conclusion, Ethereum’s recent struggles should not overshadow its long-term potential. It remains the most widely adopted blockchain for smart contracts, DeFi, and NFTs. The transition to Proof of Stake, while not yet reflected in price, sets the foundation for a more efficient, scalable, and sustainable network.


For the prudent investor, Ethereum offers a mix of risk and opportunity. While it is impossible to predict the future with certainty, Ethereum’s technological advancements, utility, and community support make it a project with strong long-term prospects. However, as always, invest responsibly, diversify, and remain informed.


(The author is the CEO of Giottus Crypto Platform)


Disclaimer: The opinions, beliefs, and views expressed by the various authors and forum participants on this website are personal and do not reflect the opinions, beliefs, and views of ABP Network Pvt. Ltd.