After Bitcoin's record run is Ethereum next?

Investing.com -- Bernstein sees a “solid revival of interest” in Ethereum , given its strong fundamentals, while it notes the cryptocurrency underperformance with peer Bitcoin significantly year to date.

Year to date Ethereum gained around 59% compared to Bitcoin’s 124% surge.

However, Ethereum’s recent performance shows promise. Over the last 30 days, Ethereum has risen 46%, outperforming Bitcoin’s 41% gain, signalling a potential resurgence.

Key factors driving this optimism include robust staking dynamics, steady transaction fees, and growing institutional interest, particularly through ETFs.

Bernstein analysts note that while Ethereum faces competition from faster networks like Solana and fragmented user experiences on Layer 2 solutions, its underlying supply-demand dynamics remain favourable.

Currently, 28% of Ethereum’s supply is locked in staking contracts, yielding an annual return of 3%. Another 10% is tied up in lending or bridged to Layer 2 chains. Moreover, nearly 60% of Ethereum’s supply has not been traded in over a year, implying a strong investor commitment.

Institutional interest has also picked up, with Ethereum ETF inflows accelerating significantly. Assets under management now total $11 billion, and recent weeks have seen net inflows reversing the trend of outflows from Grayscale’s ETFs.

Bernstein sees further potential for momentum, especially if regulatory approval allows asset managers to incorporate Ethereum staking yields into ETFs, which could enhance returns to 4-5% with increased blockchain activity.

Ethereum’s scalability model, centered on Layer 2 chains, has driven significant blockchain activity, with daily transactions on Layer 2 solutions exceeding 15 million, compared to 1 million on Ethereum’s base layer.

Ethereum retains a 63% share of total value locked in blockchains, indicating high level of trust for retail whale users and institutional users.

Source: Investing.com