Future of Ethereum

Bitcoin has reached new highs over the past week, potentially signaling a new bullish period. Meanwhile, Ethereum continues to build its future with ambitious upgrades. Despite this, ETH continues to lag behind, as if overlooked by the market. Is this just a temporary dip, or is Ethereum losing its luster? Find out more in this Bitvavo Market News update.

Market update

The price of bitcoin rose 16% last week from €76,000 to €88,000, which is another all-time high. We are now almost 50% above the top of the bull market in 2021. Anyone who has ever bought bitcoin is now seeing a substantial profit.

In recent weeks, several records have been broken, such as the biggest price increase in a single day for Bitcoin, the highest open interest for bitcoin futures, and the largest inflows to bitcoin ETFs topping $1.4 billion on Nov. 7. All of these records support the view that bitcoin's breakout is the beginning of a new period of rise for the entire crypto market.

The weekly chart below highlights the weekly close, providing a clear method to separate signal from noise. The breakout from the correction of the past eight months is unmistakable, along with the ongoing pattern of higher lows (HL) and higher highs (HH). 

Bitcoin's market share has remained more or less stable in recent weeks. There has not yet been an alt season in which most altcoins significantly outperform bitcoin. However altcoins have been able to keep up reasonably well with bitcoin during its recent surge.

This highlights notable differences: some altcoins remain well below their all-time highs of the previous bull market and have struggled to keep up in recent weeks. Others, however, are outperforming bitcoin.

SOL stands out in particular. The Solana network coin made an impressive comeback between October 2023 and March 2024 spurred by memecoin activity on the network. Today, SOL is the first of the major altcoins to achieve a new all-time high in euros. This serves as an encouraging prospect for the rest.

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The future of Ethereum

These are tough times for people and companies that have positioned their operations or investment portfolio around ether. Ethereum's fuel continues to lose value against Bitcoin, even after the outcome of the U.S. presidential election became clear. "New lows after good news."   writes macro analyst Lyn Alden. "Oof."

ETF investors aren't at fault here however, since, with inflows of over half a billion dollars, US ether funds had their best week ever. Selling pressure seems to be coming from somewhere else - possibly from people seeing better investments in competing networks or switching to memecoins, which also outperformed the rest of the market last week. Dogecoin (+32%) and Pepe (+79%) were notable gainers over the past seven days.

It feels a bit like Ethereum, once the energetic young shoot of the crypto world, is currently the old-fashioned librarian gathering dust in a corner. But those who think this is the end of the story are mistaken. Challenges often lead to progress, and Ethereans are building once again. The most recent example of this is Beam Chain, a proposal by researcher Justin Drake.

Beam Chain is an ambitious attempt to take Ethereum to the next level. With the integration of zero-knowledge technology (ZK-SNARKs), the network aims not only to become faster and more efficient, but also to provide instant finality. Within four seconds, transactions become final, eliminating delays and uncertainty. Additionally, the proposal lowers the threshold for participation as a validator: the minimum deposit drops from 32 to 1 ETH, making the network more accessible and inclusive.

Drake also addresses intractable problems, such as MEV (Maximal Extractable Value), where some participants extract surplus value from transactions at the expense of others. Beam Chain also responds to future threats, such as the rise of quantum computers. In his presentation, Drake explains that Beam Chain is not just another upgrade, but a strategic move that will prepare Ethereum for the next decade.

Ambitious plans such as this take time, however. Although the first steps are in discussion now, full implementation is not expected until 2029.

Ethereum is not a protocol that rests on its laurels; it continually pushes to innovate. The question, of course, is whether this is enough to win over investors. Ethereum is still the most widely used network, with an unprecedented amount of capital and applications. While its technical prospects are promising, investors are looking for more—they seek returns, clarity, and often something tangible.

As long as that doesn’t happen, no matter how promising the technical future may seem, the price trend of ether continues to overshadow it.

Crypto gains breathing room

Over the past week, a number of developments have emerged in the regulatory landscape for crypto in the United States.

For instance, Robinhood decided to re-offer some of the crypto currencies it had previously deleted for fear of SEC intervention. A day later, eighteen U.S. states including Texas and Tennessee, filed a lawsuit against the SEC. Their message? The regulator’s authority has gone too far.

On top of this, the Public Prosecution Service announced on Friday that it will scale back its crypto enforcement. These are signs that something is changing. Less regulatory pressure means more room for growth, which is exactly what the U.S. market needs.

Year after year, financial advisors answering surveys cite regulatory uncertainty as their biggest obstacle to investing in crypto. Matt Hougan of Bitwise reiterated this point this week. If this uncertainty disappears, it could fuel a new wave of institutional interest. With the recent election results and this week full of positive signs, this scenario seems increasingly likely. The playing field is slowly but surely becoming more attractive to a broader group of investors.

In other news

• Polymarket CEO reportedly gets a visit from the FBI. Reports suggest that Shayne Coplan's phone and electronics have been seized. Shayne is the leader of the popular prediction marketplace, Polymarket. Polymarket has questioned the motive of this move. In light of Trump's win, they say this incident raises questions about possible political motives. Coplan responded lightheartedly: "new phone, who dis?"
• '13F Season' exposes broad interest in Bitcoin. These forms require large investors to disclose their positions to the regulator. For example, it appears that BlackRock is investing heavily in its own fund, that clients of Goldman Sachs have hundreds of millions in bitcoin ETFs, and that billionaire Paul Tudor Jones has increased his Bitcoin position by more than 400%. The most telling revelation came from the conservative pension fund TIAA which took its first step worth $51,000.
• Is SEC Chairman Gary Gensler exiting the stage early? In a recent speech, Gensler appeared to signal his departure, offering thanks and reflecting on his fight for market oversight. With Trump's promise to fire him after he takes office, Gensler appears to be preparing for his departure. His approach has shaped the crypto industry, pushing companies like Coinbase into lobbying efforts, but has also created division. As Democrats exit the white house, the question is: what will Gensler's legacy be?
• Doodles on the rise after hinting at collaboration with McDonald's. In 2021, 10,000 Doodles—NFTs featuring illustrations by the well-known artist Burnt Toast—were launched. It was announced this week that McDonald’s will serve coffee in Doodle-themed cups starting 18 November. Coffee drinkers will also be able to claim unique digital gifts. The floor price of the NFT collection has risen more than 100% in a week, to nearly 3 ETH each. Historically, trading volume in NFTs remains relatively low.