Is ETH Due For A Massive Pump?

Calling the bottom on ETH feels like predicting the next natural disaster. We know that California will have more wildfires, Florida will have more floods, and the Midwest will have more tornadoes, but we don’t know exactly when or where they will arrive.

Sometimes, we have indicators forewarning us of these natural disasters. For example, in California, when the hills are dry and covered in overgrown brush, and the winds pick up, there are greater odds of a wildfire. Similar to predicting these extreme weather phenomena, certain indicators can help us prepare for when Ethereum will get off the couch and get in gear.

Let’s look at some of the reasons why Ethereum hasn’t been performing and some of the more fundamental reasons why a change in direction is overdue.

ETH Price Performance Has Been Dismal

Remember when Chipotle food was killing people? 2015-2018 were difficult years for Chipotle. The stock was severely underperforming due to multiple food-borne illnesses tracked to their restaurants. Over those three years, the former stock market darling had returns of -29.9%, -21.37%, and -23.4%.

In March 2018, Chipotle hired a new CEO who righted the sinking ship. By 2019, changes were implemented, sales improved, and CMG stock saw a +93% performance. Ever since, Chipotle stock has remained a high flyer, outperforming indexes.

Between 2022 and 2024, ETH has had a similar disappointing experience for long-term investors. On January 1, 2022, ETH traded for $3,769; on December 31, 2024, it traded for $3332. More recent investors have even been more disappointed watching the price of ETH fall to $2,650 since the beginning of this year.

Meanwhile, holding BTC would have produced stellar returns. Trading at $47,620 on January 1, 2022, Bitcoin is now trading at around $96,500 per BTC. A $1000 ETH investment at the start of January 2022 would be worth around $700 today, while the same investment in Bitcoin would be worth $2,020 today.

What Problems are Plaguing ETH?

Aside from having awful price performance, Ethereum has many challenges and obstacles to overcome. Here are a handful that come to mind.

• Increased competition from Solana and other faster, cheaper L1s.

• Poor leadership does not communicate a clear vision and roadmap for investors.

• A foundation bent on selling its supply makes investors question why they should buy something the foundation is selling.

• Rather than collaborating, the L2 patch has fragmented liquidity and siloed profits into the L2 rather than the Ethereum main chain.

• Monetary policy is tightening instead of loosening, leading to less liquidity available to go into Ethereum.

• It’s a very unpopular investment choice and frowned upon by many in crypto. Several investors have given up on the chain and allocated their funds elsewhere.

These are valid and logical reasons to avoid investing in ETH today. Presented with these arguments, I’d probably run away from investing in ETH. And that may be the best option right now.

However, instead of running from ETH, I have been stacking it as fast as I can at these levels under $3000. Now, let me share my thesis on why.

Reasons for Accumulating ETH Today

In a few months, we may be looking at this time wishing we secured more ETH at sub-$3000 price points. Here are some reasons why ETH presents one of the best risk/reward scenarios in the crypto market.

Reason #1- Retail is not interested in ETH. Google keyword searches for Ethereum searches haven’t meaningfully spiked since May 2021.

Meanwhile, here are Solana's Google searches.

I am taking the contrarian approach to this. When Solana had a similar Google interest to Ethereum’s current interest, it traded for $22.

You could argue that interest hasn’t spiked because no improvements or adoption occurred on Ethereum. That brings me to Reason 2.

Reason #2- While the ETH price is up 1.8% in the past 12 months, the backdrop has markedly improved.

If we went back to February 1, 2024, and I told you in the next year, the following things would happen:

• ETH would get an ETF approved that would attract $4B in net new investment

• ETH would Increase its Total Value Locked by 83% from $31B to $57B

• The US would have a new president who owns and accumulates more ETH in their portfolio.

• Total Value Locked on Ethereum would increase from $31B to $57B

• The Ethereum work would complete its Dencun upgrade with a few hiccups.

• Gary Gensler would resign within 12 months.

• Stablecoins on ETH would skyrocket from $70B to $121B, its highest point in history.

• BTC would increase in value by 95% in the next year.

Would you have thought the ETH price would increase by over 1.8%? I know I would have. Meanwhile, here we can buy ETH for around the same investment it was before all this great news.

Reason #3- Smarter People Than Me Are Bullish on ETH

I might try to fool myself into occasionally thinking I’m smarter than some talking heads and analysts. However, when people who are more in tune with things and have “extra” knowledge make bold statements, I like to listen.

Here are some snippets from what smarter and more well-connected people have said about Ethereum.

Bitwise CIO recently said the following about altcoins:

“For the past four years, altcoins have largely been in a regulatory gray zone, with the SEC (Securities and Exchange Commission) alleging that most are illegal securities offerings. This has stunted real-world adoption and kept large firms and the best developers from building in the space.

All that has been reversed. Today, the US has made the growth of stablecoins a national priority, which will support the growth of Ethereum and Solana. Today, the largest institutions in the world feel safe building on crypto, which will bring DeFi (decentralized finance) applications to the masses.

If you squint, you can see evidence of this shift in things like stablecoin AUM (assets under management), which recently hit an all-time high, or in new projects like Ondo Finance’s recent move to tokenize all stocks and ETFs (exchange-traded funds) in the US. That project would never have gotten off the ground under the past administration.

In a year or two, my guess is that you’re not going to have to squint to see the transformation in altcoins; the impact will be self-evident. And overwhelming.”

When the president’s outspoken son posts messages like this on X, it gives me pause because maybe he has access to much more information than I do.

Regarding Ethereum’s technology becoming obsolete, I will refer to the Crypto Managing Partner at Hack VC, Alexander Back’s explanation:

“Ethereum has been falling behind Bitcoin and Solana in growth during this market cycle, and many believe it’s because Ethereum decided to split its responsibilities across different parts of its system. This approach, called modularization, means Ethereum relies on separate projects to handle tasks like processing transactions and ensuring security. While this has helped Ethereum grow its ecosystem, it has hurt the value of its main token, ETH, in the short term. Fees on the network have gone down, so less ETH gets burned (removed from circulation), which lowers its price. Additionally, new modular projects with their own tokens are taking away some of the attention and investment that used to go to ETH.

The decision to modularize, however, is part of a bigger plan to prepare Ethereum for the future. By working with these smaller, specialized projects (called Layer 2 solutions), Ethereum can grow and keep up with new technology that improves how blockchains work. Even though Ethereum now shares the spotlight with other blockchains, it has still managed to keep about 75% of its market share over the last nine years — a much smaller drop than similar tech companies like Amazon Web Services, which fell to about 35%. This modular strategy ensures that Ethereum can stay relevant and adapt to changes, even if it means making sacrifices today.

In the long run, Ethereum’s choice to modularize could help it stay ahead. By supporting innovation and creating a larger, more advanced ecosystem, Ethereum can continue to attract developers and users. While this strategy makes Ethereum harder for beginners to use and spreads economic benefits unevenly (with some profits going to new projects instead of ETH holders), it could protect Ethereum from being replaced by newer technologies. This forward-thinking approach gives Ethereum the tools to remain one of the leading platforms in the blockchain world, even as the industry evolves.”

Reason #4: The Risk/Reward is Very Attractive at Current Prices.

Can ETH prices drop? Absolutely. But how much further to the downside do you think it can go? Recently, the crypto market experienced its worst leverage washout, wiping out an estimated $10B in long positions in 24 hours, and Ethereum flash crashed to the $2100 level.

The following day, ETFs came in with a huge buy order on ETH. Even if ETH decides to revisit this level and double bottom, it will represent a 20% drop from the current levels.

On the other hand, if ETH revisits its all-time high of around $4800, that represents an 80% increase. I am willing to risk a 20% drawdown with the upside goal of an 80% profit. And if ETH surpasses $4800, it can go much higher. Bullish estimates have it peaking at $12-$15K this cycle.

The safest play is Bitcoin, so that is the spot to be if you want crypto exposure with the lowest risk. However, regarding risk/reward, I think you’ll have difficulty finding something better than ETH.

Key Takeaways

Last cycle, I sold my ETH at $150 during the Covid dip. It went to $85 shortly after (for about ten minutes), and I felt like a genius. Within 12 months, it was trading at $1500. I missed an easy 10x if I hadn’t gotten shaken out. Even more painful, ETH proceeded to 3X that and reached $4800 at the peak.

Many longtime crypto investors have similar stories. Counting ETH out has led to many lost opportunities. And I’m not prepared to make the same mistake again. While I don’t think ETH will be 10X from here, I am confident the downside risk is reduced based on today's political and regulatory environment.

Additionally, many catalysts can ignite Ethereum and make it move quickly. Some of the ones that come to mind are:

• Adding staking to the ETH ETFs

• Global liquidity increasing with all the levers and money pools governments have, raising risk appetite that will flow into ETH.

• A dismissal of any SEC claims against Ethereum and implementation of regulations that will benefit ETH.

• Bitcoin increasing in price and creating a halo effect on ETH.

I own ETH, BTC, and SOL. This information should not be taken as investment advice. I haven’t been paid to write this article. Digital assets like crypto and NFTs involve risk, so you should always perform due diligence before investing.

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