Is ETH dead, or will it overperform in 2024?
After BTC, Ethereum is the most valuable cryptocurrency by market cap. Both digital coins have a massive trading volume and a large number of users. BTC is designed as an alternative to fiat, while ETH went a step further by enabling the creation of smart contracts and dApps. ETH also recently changed its consensus mechanism from PoW to PoS, which made it more eco-friendly.
However, ETH faced many challenges during the last year, which is why many investors began to doubt its performance.
What Is the Current State of Ethereum?
Looking at the Ethereum price history, you’ll notice that its value in 2022 was much lower than in 2021. On that note, on November 9, 2021, ETH reached its ATH of $4,815, primarily due to the Berlin update that led to the Ethereum merge. However, its price dropped drastically after the FTX crash at the end of 2022.
Throughout 2022, the ETH price fluctuated between $1,100 and $1,200. Ethereum managed to hit the $2,000 mark again in November 2023, after which its price gradually began to rise.
In 2024, its opening price was $2,282, and its market cap was $282 billion. At the time of writing, ETH is worth $3,802, and its market cap is $455 billion. This shows that in less than six months, its value went up by about $1,520, mostly thanks to the launch of the Dencun upgrade, which went live on March 13, 2024.
Will Ethereum keep going up? We believe it will, especially because the SEC approved Ethereum ETFs on May 23, 2024.
Is Ethereum Dead?
On the one hand, the Ethereum future looks bright if we consider the following factors. First of all, this digital coin has a strong community. At the time of writing, it has 270.82M unique addresses and a daily trading volume of $17.85B.
Secondly, ETH is constantly improving its network through new updates, such as the aforementioned Dencun upgrade, which introduced proto-danksharding. Moreover, its shift to Ethereum 2.0 enabled it to reduce gas fees and speed up transactions.
Finally, the recent BTC halving could significantly affect the price of ETH. If Bitcoin reaches its ATH, the same could happen with other altcoins, including Ethereum.
On the other hand, some crypto analysts think that ETH competitors, like Solana and Cardano, could outperform Ethereum due to lower fees. Moreover, an increasing number of new crypto projects, especially meme coins, run on Solana.
For example, during its debut on major crypto exchanges, SLERF, a SOL-based meme coin, exceeded all ETH-based exchanges in trading volume. However, this doesn’t mean Solana will outperform Ethereum in 2024, as this coin has yet to surpass its ATH of $259.96.
What Are the Ethereum Challenges?
Ethereum is struggling with its scalability issues and large fees. On that note, the Ethereum mining process can generate between 7 and 15 transactions per second. This is a relatively small figure compared to, let’s say, the Visa network, which can process 45,000 transactions per second. Scalability issues can also lead to network congestion, which results in slow transactions.
Moreover, its limited processing capacity leads to high fees that go up to 60 Gwei, which is about $7.47. Even the Merge failed to reduce ETH’s transaction fees, although it increased the network speed by about 20%.
This is why Ethereum will fail if it doesn’t solve its scalability issues. As a result, more new crypto projects will run on networks that offer low fees and fast transactions, like Solana and Cardano.
Ethereum’s Role in Decentralized Finance (DeFi)
The Ethereum network enables developers to access dApps and DeFi protocols. ETH is also used as collateral for borrowing, lending, and yield farming. DeFi protocols built on the ETH blockchain enable users to participate in global financial markets.
Likewise, the Ethereum network allows developers to create smart contracts and programs that will enable trading without intermediaries. Many dApps interact with blockchains via smart contracts. Ethereum is also used to create decentralized autonomous organizations (DAO) and tokens. The most popular protocol for creating tokens on the Ethereum network is the ERC-20 standard. ERC-20 tokens are fungible, which means that all tokens are interchangeable.
Ethereum contributed to the creation of liquidity pools. Liquidity pools allow investors to earn interest by locking their tokens for a certain period. These pools are the foundations of many DEXs, like Uniswap and PancakeSwap. And finally, the ETH network can host stablecoins, like USDT, USDC, and DAI, which play an important role in the DeFi ecosystem.
Conclusion
So, is ETH dead? No. This cryptocurrency is slowly recovering from its 2022 drop in value. Namely, its developers are constantly trying to solve its scalability issues by launching new upgrades. Moreover, ETH plays an important role within the DeFi protocol. This will extend its utility, which will increase its value in the long run. Although Ethereum may never overtake its main rival, BTC, this coin is far from dead.