While Bitcoin Seems To Be On The Way To Bounce Back, Ethereum Moves Slower – Will It Reach A New High In 2025?

Bitcoin completed its fourth halving in April 2024, and the entire sector is waiting for it to follow its usual path and gain in value. Crypto specialists believe that it will suffer price adjustments at the beginning of 2025 and will most likely reach a new high during the next bull run. Surprisingly, Ethereum didn’t follow the same trajectory, even if it usually moves in tandem, and investors are forced to exercise their patience and stick to their strategies. Ethereum faced a couple of challenges over the years, as the eth price chart shows at the moment, but its supporters are confident that it will grow in value in the long run and overcome any hurdle.  This article is meant to analyze how Ethereum and Bitcoin will behave in 2025 to help investors figure out what strategies to put in place.

Let’s start with Bitcoin

Bitcoin supporters believe that it could go over past all-time-highs at the start of 2025, as the price will surge as it normally does a couple of months after the halving. Investors also count on the increased institutional adoption of Bitcoin to enhance the value boost, especially now that people can also invest in Bitcoin ETFs. Bitcoin will most likely remain the market leader and outperform the other digital currencies.

Now, let’s discuss Ethereum

If you’re familiar with the crypto market, then you know that Ethereum, the second-largest asset, suffered an unfortunate value decline in 2024. Some investors are concerned that the factors that caused the price drop will sustain the downturn. However, Ethereum has experienced similar situations before, and it bounced back every time, so it’s worth being confident in its ability to rebound.

How do Layer-2 solutions impact Ethereum?

Most crypto experts agree that Ethereum struggled over the last couple of months due to Layer-2 solutions that took ground. Layer-2 solutions are vital for Ethereum’s progress because they directly impact its expansion and scalability, but they have also affected its economic model and caused a deflationary movement. It’s challenging to grasp the ways in which Layer-2 solutions impact Ethereum fully, but if you understand how they function, you can better predict Ethereum’s future position in the market. It’s best to start by discussing the London hard fork in August 2021 that presented the EIP-1559 upgrade, which was meant to change the standard for transaction fees. After the London fork, the blockchain burns the base fee for each transaction to remove from circulation coins and control the cryptocurrency’s supply. The burn mechanism aims to transform Ethereum into a deflationary asset and limit the inflationary effects caused by new issuance. It’s a smart move because the more transactions are completed, the more Ether is burned, and the total available supply will be maintained to a limit that transforms Ethereum into a competitive asset. This will work similarly to the halving for Bitcoin, which ensures the cryptocurrency maintains its scarcity.

Layer 2 (L2) scaling solutions like Optimism, Arbitrum, and zk-rollups have been critical in alleviating Ethereum’s network congestion and high gas fees. By 2025, the development and adoption of L2 solutions will likely mature, leading to a smoother user experience with lower costs and higher transaction speed. These advancements will help Ethereum retain its place as the backbone for many decentralized applications (dApps) and DeFi protocols, making it the preferred choice for both developers and users.

The long term impact of Ethereum 2.0

Ethereum’s transition from a Proof of Work (PoW) to a Proof of Stake (PoS) system in the 2022 Merge has already made the network more energy-efficient, reducing its carbon footprint by 99.95%. The full implementation of Ethereum 2.0 (with additional phases beyond the Merge) will enhance scalability through sharding, which is expected to be completed by 2025. Sharding will dramatically increase the network’s throughput, enabling thousands of transactions per second (TPS), and lowering transaction fees. These improvements will make Ethereum more competitive, attracting developers and users who have migrated to other faster, lower-cost blockchains.

Other factors

Institutional Adoption and Regulation – The regulatory landscape for cryptocurrencies is expected to evolve by 2025, potentially providing more explicit frameworks for institutional investors to engage with Ethereum-based assets. Institutional adoption has been a key driver of growth for many crypto projects, and Ethereum’s robust infrastructure makes it a prime candidate for businesses looking to enter the blockchain space. Ethereum has already shown strength in non-fungible tokens (NFTs), DeFi, and enterprise blockchain solutions. As regulations become more favorable, more institutions may use Ethereum for decentralized finance, supply chain solutions, or digital asset management. DeFi and NFT Ecosystem Growth- Ethereum remains the dominant blockchain for DeFi and NFTs, despite competition from other platforms like Solana and Binance Smart Chain. In 2025, the DeFi sector is expected to expand further with innovations in decentralized exchanges (DEXs), lending platforms, and tokenized assets. Ethereum’s smart contract functionality will continue to serve as the foundation for these services. Additionally, the NFT market, which gained mainstream attention in 2021, is likely to evolve with more use cases beyond art and collectibles, including gaming, real estate, and intellectual property rights, further strengthening Ethereum’s position.

Web3 and the Metaverse – The vision of a decentralized Web3, where users control their data and digital identities, hinges on blockchain infrastructure. With its well-established smart contract capabilities and developer community, Ethereum is poised to be a leading platform in Web3’s development. By 2025, as more companies and projects invest in building decentralized applications and metaverse platforms, Ethereum will likely play a crucial role in powering these innovations. The convergence of DeFi, NFTs, and decentralized applications (dApps) on Ethereum could further cement its relevance in the future internet. Macro Factors and Market Sentiment – By 2025, macroeconomic conditions, such as inflation control, interest rates, and overall investor sentiment towards risk assets, may shift to favor Ethereum and other digital currencies. If the global economy stabilizes and cryptocurrency gains broader acceptance as a hedge or speculative asset class, Ethereum could see a renewed surge in interest and investment.

Final words

While Ethereum has experienced challenges, its fundamental value proposition remains strong. By 2025, scalability improvements, adoption of DeFi and NFTs, favorable regulation, and macroeconomic factors could position Ethereum for a significant resurgence. Its role in Web3 and the metaverse will likely solidify its importance, driving demand and technological innovation on the platform.