On February 8, a newly published analysis from Coinbase’s research division illuminated the projected expansion in Ethereum’s trading activities throughout the first half of 2024.
Coinbase analysts emphasized pivotal areas of growth following the endorsement of decentralized finance (DeFi) spot Bitcoin (BTC) ETFs and the broader cryptocurrency market.
As outlined in the report, Ethereum’s progress has been gradual in recent months, with Bitcoin drawing increased attention from institutional investors.
Spot Ethereum ETFs Expected to Fuel Growth
Despite Ethereum’s slower growth compared to other cryptocurrencies, analysts foresee a shift in the narrative driven by institutional investments in the first half of the year.
“We believe there’s potential for ETH to catch up to its peers in 1H24. Although there was some rotation into ETH following the launch of spot bitcoin ETFs, momentum was hindered by liquidations from a major defunct crypto lender and pressure from the sale of ETH options.”
The expectation of growth primarily hinges on the possible approval of spot Ethereum ETFs, echoing the market acceptance Bitcoin has experienced. Such approval could unlock fresh opportunities for Ethereum.
ETH saw an increase of over 80% in 2023, with rising DeFi metrics and institutional fund inflows, despite playing second fiddle to Bitcoin’s surging ETF narratives.
Bitcoin led the market with gains exceeding 158% in 2023 as institutional funds gradually entered, particularly after BlackRock’s ETF application, offsetting losses from the challenging crypto winter of 2022.
Solana’s Growth Eclipses Ethereum
Ethereum’s institutional growth has been overshadowed by Solana (SOL), which has garnered significant inflows into investment funds, earning it the title of an institutional investor favorite.
This year, while the approval of spot Bitcoin ETFs has attracted flows into both the market leader and altcoins, Ethereum’s momentum still falls below the expectations of most analysts.
Last year, a consortium of wealth managers identified Ether as possessing the highest growth potential among top crypto assets, despite the figures at the time.
These firms examined the activities surrounding decentralized applications (dApps) on the Ethereum Network and their performance during bull runs to inform their predictions.
Moreover, the staking mechanism on the blockchain, following its transition to a Proof-of-Stake (POS) model, has the potential to attract new users seeking staking rewards.
Similarly, a publication by Grayscale highlighted Ethereum’s underperformance in 2023, despite its strong returns, attributing it to Bitcoin-specific positives that year and a slower recovery in Ethereum’s on-chain activity compared to other networks.