Ethereum’s Great Erosion: Fall of a Titan?

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Ethereum’s Great Erosion: Fall of a Titan?

By Kapil Rajyaguru

Ethereum, the cryptocurrency that marked a meteoric rise to $4007 during the Trump euphoria has, of late, lost its shine and finds itself engulfed in a downward spiral, given the negative market sentiment. As wary investors look for safer haven assets, Ethereum is struggling hard to regain its lost glory amidst widespread uncertainty.

“Betting against Ether has been the best performing exchange traded fund (ETF) strategy so far in 2025,” says Bloomberg analyst Eric Balchunas.

To make matters worse, two Ethereum short-selling funds have emerged as some of the high-return investments. In the year-to-date, ProShares UltraShort Ether ETF (ETHD) and T Rex 2X Inverse Ether Daily Target ETF (ETQ) are up approximately 247% and 219%, respectively, Bloomberg Intelligence data showed. This underscores a bearish sentiment towards Ethereum.

Since their respective launches, the divergence in net flows tells its own story: The Bitcoin ETF market has seen a total net flow of over $35 billion since inception on January 11, 2024, while Ethereum ETFs have recorded net flows exceeding $2.28 billion since launching on July 23, 2024.

Despite the Dencun upgrade in March 2024 that aimed to reduce transaction fees on Ethereum’s Layer 2 networks by up to 99%, its native token Ether continues to suffer because of the challenges in monetizing its Layer 2 scaling chains.

From dominating over 70% of DeFi to barely holding onto 54%, Ethereum has been bleeding market share. After President Trump’s return to White House, Ethereum’s market cap has fallen from over $600 billion to around $202 billion.

On the other hand, Solana is blazing past with 860 real-time TPS versus Ethereum’s sluggish 13.45.

Projects are migrating, foundations are silent, and the spotlight is shifting.

On the back of Low TPS and Higher GAS fees several projects have moved away from Ethereum

Migration Exodus:

• Helium moved to Solana citing faster speed and lower fees.
• Lens Protocol began building cross-chain features, eyeing Base and Avalanche.
• DeGods and y00ts, two major NFT projects, left Ethereum altogether for Solana and Polygon

Developers are now pushing forward with Pectra upgrade, aimed at improving efficiency and addressing the short comings and, Staking in Spot ETH ETFs could prove to be another lifeline for Ethereum.

Currently, ETF managers can’t stake ETH due to regulatory limits. If this changes:

• Yields of 3.5–5% APY could be unlocked.
• Institutional holders could earn passive income.
• This could reduce sell pressure and boost long-term holding.​

However, the U.S SEC is yet undecided on this. But with Paul Atkins, who was confirmed by the Senate last week as the new SEC Chair, things could also change dramatically.

As Standard Chartered noted: “The real ETH story begins when ETFs offer staking. That’s when institutions stop trading and start investing.”

Conclusion: So, well, Ethereum is battered but not broken. The road ahead hinges on scalability, institutional incentives and bold upgrades. Pectra and ETF staking might help it defend its crown, and Ethereum may bounce back with gusto rather than risk fading as a relic in the age of Solana and beyond.

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