Ethereum (ETH) saw a strong rally this week, climbing approximately 6% as investors position themselves ahead of key catalysts expected in January 2025. According to data from Coin Metrics, the upward momentum reflects growing confidence in Ethereum’s near-term prospects. While Solana’s SOL token has significantly outperformed ETH over the past year—up over 980% year-to-date compared to Ethereum’s 95% gain—the tide may be turning. Ethereum has risen about 15% this month alone, outpacing SOL’s 82% increase during the same period.
This shift suggests a potential rotation back into Ethereum from alternative smart contract platforms. Analysts point to strengthening fundamentals, upcoming network upgrades, and favorable regulatory expectations as core drivers behind the renewed interest.
👉 Discover how major crypto upgrades could reshape market dynamics in 2025.
Ethereum Regains Momentum After Extended Lag
For much of 2023 and early 2024, Ethereum trailed behind high-performance blockchains like Solana and Avalanche in terms of price performance and developer activity. However, recent trends indicate a reversal. Needham & Company analyst John Todaro attributes this turnaround to a broader market reallocation: “We believe this is due to the ecosystem rotating back into Ethereum. Solana and Avalanche outperformed for an extended period, and now Ethereum is catching up in the cycle.”
The renewed focus on Ethereum comes amid rising on-chain activity, improved scalability prospects, and growing anticipation for institutional adoption. As layer-2 networks built on Ethereum mature, they are driving down transaction costs and increasing throughput—making the ecosystem more competitive with faster, cheaper chains.
Matt Maximo, Senior Research Analyst at Grayscale Investments, noted that Ethereum’s latest price movement signals a structural shift: “Wednesday’s rally suggests the market is finally pivoting toward Ethereum-centric trades. Even though we haven’t yet seen formal SEC approval for a spot Bitcoin ETF, the momentum is building. Ethereum’s on-chain fundamentals remain robust—so it’s not a question of if it will catch up, but when.”
Key Catalysts Expected in January 2025
Two major events scheduled for January 2025 are capturing investor attention and fueling speculative demand:
1. The Dencun Upgrade – Scaling Ethereum’s Future
Set for deployment around January 17, 2025, the highly anticipated Dencun upgrade aims to dramatically reduce fees on Ethereum’s layer-2 networks through proto-danksharding—a critical step toward full danksharding in future updates.
This upgrade introduces EIP-4844, which enables “blobs” of data to be attached to Ethereum blocks, allowing layer-2 rollups like Arbitrum, Optimism, and zkSync to post transaction data more efficiently. The result? Estimated cost reductions of up to 90% for users transacting via L2s.
“This is a game-changer for Ethereum scalability,” said Maximo. “Lower costs mean better user experience, higher adoption, and increased revenue potential for protocols operating on layer-2s. It removes one of the biggest friction points that pushed users toward competing chains.”
Developers anticipate that Dencun will solidify Ethereum’s dominance in decentralized finance (DeFi), non-fungible tokens (NFTs), and Web3 applications by making them accessible to a broader global audience.
👉 Learn how blockchain upgrades are unlocking next-generation crypto use cases.
2. Potential Approval of Spot Bitcoin ETF
While not directly tied to Ethereum, the expected decision by the U.S. Securities and Exchange Commission (SEC) on spot Bitcoin exchange-traded funds (ETFs) in January 2025 is being closely watched by ETH investors.
Historically, regulatory clarity for Bitcoin has often paved the way for similar treatment of Ethereum. Although the SEC has not yet approved a spot Ethereum ETF, many analysts believe a green light for Bitcoin could set a powerful precedent.
“If the SEC approves a spot Bitcoin ETF, it would mark a turning point in crypto regulation,” explained Todaro. “It signals institutional acceptance and opens the door for similar products based on Ethereum. That’s why ETH is reacting positively—even before any official announcement.”
Such approvals could unlock billions in institutional capital from pension funds, asset managers, and retail investors who prefer regulated investment vehicles.
Why Ethereum’s Fundamentals Remain Strong
Beyond short-term catalysts, Ethereum continues to demonstrate strong underlying health:
- Active developer community: Ethereum hosts the largest pool of blockchain developers globally, consistently introducing innovations and security improvements.
- Dominance in DeFi and NFTs: Over 60% of total value locked (TVL) in decentralized finance resides on Ethereum-based protocols.
- Staking growth: More than 30 million ETH are currently staked—representing over 25% of the total supply—highlighting long-term holder confidence.
- Enterprise adoption: Major financial institutions and tech firms continue integrating Ethereum-based solutions for payments, identity verification, and tokenization.
These factors contribute to what many see as a durable moat around Ethereum’s position as the leading programmable blockchain.
👉 Explore how staking and network upgrades are transforming Ethereum’s value proposition.
Frequently Asked Questions (FAQ)
Q: What is the Dencun upgrade?
A: Dencun is a major Ethereum network upgrade scheduled for January 2025. It introduces proto-danksharding (via EIP-4844) to reduce data storage costs for layer-2 rollups, significantly lowering transaction fees and improving scalability.
Q: How does a spot Bitcoin ETF affect Ethereum?
A: While Bitcoin-focused, approval of a spot ETF would signal clearer regulatory pathways for crypto assets in the U.S. This could increase investor confidence in Ethereum and improve the odds of a future spot ETH ETF being approved.
Q: Is Ethereum still competitive against Solana and other blockchains?
A: Yes. Despite Solana’s strong performance in recent years, Ethereum is regaining ground through technological advancements like layer-2 scaling, strong institutional support, and unmatched ecosystem maturity.
Q: When will Ethereum transaction fees drop?
A: With the Dencun upgrade expected in mid-January 2025, users should see substantial fee reductions on layer-2 networks shortly after implementation.
Q: Why are investors buying Ethereum now?
A: Investors are positioning ahead of major catalysts—Dencun and potential ETF developments—that could drive increased adoption, lower costs, and higher valuations in early 2025.
Q: Can Ethereum surpass its previous all-time high?
A: Many analysts believe so. With improved scalability, strong fundamentals, and growing institutional interest, Ethereum is well-positioned to exceed its prior peak if market conditions remain favorable.
The convergence of technical innovation, regulatory progress, and macro-level investor sentiment positions Ethereum for a pivotal start to 2025. As the ecosystem evolves beyond its scalability challenges and gains broader financial legitimacy, ETH may be entering a new phase of sustained growth—driven not just by speculation, but by real-world utility and adoption.