Ethereum (ETH) is perceived as having an appealing risk-reward ratio by analysts at Bernstein, despite lagging behind other major cryptocurrencies in 2024. While Bitcoin and Solana surged, Ethereum's YTD increase was 57%. Strong fundamentals, despite underperformance, hint at potential for a rally.
Bernstein analysts, led by Gautam Chhugani, note ETH hasn’t established itself as a durable store of value like Bitcoin, and faces increasing competition from fast Layer 1 blockchains such as Solana. Reliance on Layer 2 solutions diverts users, limiting transaction fee growth.
The outlook may improve after Republican Donald Trump's presidential win, which boosted cryptocurrency market caps and Ethereum's value. ETH is rising with the possibility of staking yield ETFs and recent ETH ETF inflow growth, surpassing Bitcoin's daily ETF inflows.
Ethereum's shift to proof-of-stake and its burn mechanism stabilize its supply. Approximately 60% of total supply remains unmoved, potentially offering favorable demand-supply dynamics, aiding future growth prospects for ETH.
