Ethereum has fallen $1 trillion behind Bitcoin in terms of market capitalization due to a decline in whale transactions, ETH sales, and slow adoption of ETFs. Concerns about centralization following Ethereum’s transition to Proof-of-Stake have also contributed to its ongoing struggles in the market.
Whale demand for ETH has dropped by almost 70% since the bull cycle in 2021, which has significantly reduced the network’s liquidity and appeal to large investors. Vitalik Buterin, the founder of Ethereum, has pointed out that the separation of powers in the network can lead to centralization among actors performing specialized tasks.
The Ethereum Foundation has also sold off around 336,000 ETH (approximately $906.3 million) in the past four years, further fueling the bearish sentiment surrounding the asset. The three main factors driving the decline of ETH in 2024 are the significant decrease in whale transactions, the sale of over $1 billion in ETH during market rallies, and the slower adoption rates of Bitcoin ETFs compared to Ethereum.
As Ethereum developers confirmed the Altair upgrade scheduled for late October, Ethereum’s market cap had already fallen $1 trillion behind Bitcoin by October 2024, a significant difference from the $625 billion gap during the bull cycle in 2021.
The transition from Proof-of-Work to Proof-of-Stake has raised concerns about centralization in Ethereum, as only large stakers can meet the minimum stake requirement of 32 ETH. This has resulted in the dominance of major validators, with Beaverbuild and Titan Builder validating 88.7% of blocks in October 2024. Buterin has introduced a new roadmap to address these centralization risks and investors are eagerly waiting for further developments in 2025.
At the time of writing, Ethereum is trading at $2,635.43, with a 3.97% decrease in the past day and a 0.50% increase in the past week, according to CoinMarketCap.
