The chances of Ethereum’s ether (ETH) surpassing its year-to-date high of $4,000 by December’s end appear slim, with the market assigning only a 10% probability to such an outcome, according to Amberdata research.
While bitcoin (BTC) has surged 109% this year, reaching new lifetime highs above $90,000, ETH has lagged, climbing just 36% and remaining far below its all-time high of $4,832 set in 2021. At its current price of $3,100, ETH continues to underperform, leaving investors questioning its appeal as BTC forges ahead.
Market expectations for ETH remain muted. Options data from Deribit, analyzed by Amberdata, reveals traders anticipate only a slim chance of ETH reaching the $4,000 level by Dec. 27. Amberdata’s Director of Derivatives, Greg Magadini, attributes this pessimism to weak fundamentals, noting that Ethereum’s value proposition as “sound money” has been undermined. The deflationary supply dynamics, driven by transaction fee burns, have given way to inflationary trends as most decentralized finance (DeFi) activity has migrated to Ethereum’s layer-2 solutions rather than its primary layer-1 blockchain.
“ETH faces serious headwinds as nearly all DeFi transactions now occur on L2s,” Magadini said in a client note. “This has drastically dampened prices, undermining its supply-deflation narrative.”
Adding to the uncertainty, Ethereum researcher Justin Drake recently proposed the ambitious “Beam Chain” at the Devon gathering. This initiative aims to reduce block times from 12 seconds to 4 seconds, potentially increasing the throughput of Ethereum’s layer-1 chain. If successful, the proposal could encourage more transactions on the main chain and alleviate some of the current supply concerns. However, the Beam Chain initiative is still in its early stages and may take years to materialize—if it ever does.
Despite ETH’s sluggish fundamentals, some analysts suggest that bitcoin’s continued rally could provide a tailwind for ether, potentially propelling it past $4,000. However, even in such a scenario, ETH is likely to underperform BTC, highlighting its ongoing struggle to regain investor favor.
For now, ether’s future hinges on resolving its layer-1 usage challenges and reigniting institutional interest amid a shifting regulatory landscape under the Trump administration.
UPDATE (Nov. 19, 2024, 16:38 UTC): Added context regarding the Beam Chain proposal and its potential impact.
