Is Ether Back From the Dead?

It’s been fashionable for a while to dunk on ETH.

Whereas U.S. spot bitcoin ETFs catapulted the orange coin into the mainstream (and to $118,000) within a year and a half of their release, the investment vehicles did not have the same effect on ether, which is currently trading for $3,400 — the same price as in February 2024, before its own spot ETFs were issued.

The problems are multiple. Ethereum is harder (and more expensive) to use than other layer 1s like Solana. The network’s on-chain value is also split between ETH and layer 2 tokens like ARB and OP.

Not to mention that Ethereum, due to its complexity, lacks a catchy slogan that could help financial advisors (already bewildered by bitcoin) understand the value of its native token. If BTC is digital gold, what is ETH? Digital oil? Ultrasound money? The currency powering a world computer? It just doesn’t hit the same.

The Ethereum ecosystem has taken note of these issues and is attempting to correct course, to little effect as far as price is concerned. However, the emergence of ETH treasury companies like SharpLink and BitMine — which employ Michael Saylor’s playbook but with a different asset — seems to have sparked a vigorous rally.

Will it be sustained? Who knows. But as I write these lines, ETH is up 5.5% in the last 24 hours, 23% in the last week, and roughly 135% since it bottomed in April. The ETH/BTC ratio (which has been plunging in a straight line since The Merge in September 2022) has made a higher low and is back to trading at February levels. Ether ETFs, meanwhile, just experienced their best day yet, attracting $726 million in net inflows on Wednesday.

“The ecosystem’s narrative has greatly improved,” Steve Berryman, chief business officer at Bitwise Onchain Solutions, told CoinDesk. “We’re getting more clarity on the roadmap, we’re starting to see its benefits. We’re also seeing institutional adoption, an increase in real world assets. All of these things are starting to snowball together at the same time.”

In addition, the stablecoin bill (which could be ratified by Congress any minute now) will probably boost Ethereum more than other networks since more than half of the stablecoin supply remains in its ecosystem, Tim Lowe, a strategic advisor at the firm, told CoinDesk.

Put differently, Ethereum might emerge as the big winner from the increasing crypto regulatory clarity that has come with Donald Trump’s re-election. And that may help solve its marketing problem, Berryman argued: Ethereum could stop trying to define its complex nature with one catchy soundbite and just focus on being known as the platform for stablecoins and real-world assets

How does that help ETH? Here’s the theory: “There is a direct relationship between the value held on the network and the price of ether, because ultimately, it’s the value of the token that secures the network. If the network is holding trillions of dollars, you can’t secure that with a million dollars,” Lowe said. “Fundamentally, it has got to be proportional to the amount that is secured.”

“As that amount goes up, the token price will go up.”