What happened to Ethereum (ETH) in the first quarter of 2025
The ETH cryptocurrency's value rose slightly above $4000 in December 2024. However, this level did not last long: in early February 2025, the price of the leading altcoin fell below.
Crypto experts and analysts disagree on why Ethereum shows weaker dynamics than less capitalized altcoins such as Solana and Binance Coin (BNB. However, they all agree that interest in the Ethereum ecosystem continues to fall amid growing competition among blockchain platforms.
Falling investor and developer interest in the Ethereum ecosystem
According to the dynamics of token and project launches, we can see that new blockchain platforms such as Solana, Tron, and BNB Smart Chain have taken the lead. The main reasons for this are cheaper transactions and the high performance of these decentralized platforms.
According to the community, Ethereum is noticeably behind many newer ecosystems in terms of technical performance, and the project itself has passed its peak and is on the decline.
For the same reason, users and developers of Web3 projects and tokens choose other ecosystems. According to Chainspect, Solana processes more than 1,100 transactions per second (TPS) in real-time, while Ethereum has only 16. Ethereum is not even among the top ten most productive blockchains by this indicator.
There is no need to go far; for example, Solana and BNB Smart Chain blockchains were chosen as the most popular platforms for launching tokens Pump.fun and Four.meme, respectively. For example, current US President Donald Trump chose the Solana blockchain to launch his meme token, Official Trump (TRUMP). TRUMP token became the 4th in memcoin market capitalization and entered the top 40 of the overall cryptocurrency ranking according to the same indicator.
On-chain data also confirms the poor dynamics: according to the Token Terminal service, Ethereum ranks only 13th in terms of the number of daily active users, which is only about 394,000. By comparison, the same indicator of the leading platform Solana is almost 10 times higher — 3.3 million. Moreover, over the past six months, the number of daily active Ethereum users has rarely exceeded 400,000.
Other key indicators, such as trading volume on exchanges, liquidity on the decentralized finance (DeFi) market, and gas usage in the Ethereum network, also show negative dynamics.
The fall of Ethereum
The head of the well-known analytical service CryptoQuant, Ki Young-Joo, also noted the growth of the wave of sales of the cryptocurrency ETH, which reached record levels over the past few months.
The situation was exacerbated by the general correction in the crypto market, caused first by a hacker attack on one of the leading crypto exchanges, ByBit, in February 2025, the damage from which is estimated at $1.4 billion, and then by recessions in the US market caused by Donald Trump's trade policy.
By the way, due to the hack of the ByBit crypto exchange, which became the largest in the history of cryptocurrencies since the attack on Mt. Gox, it was the Ethereum ecosystem that suffered the most, as hackers took away the ETH cryptocurrency and its tokenized counterparts (LST tokens stETH and mETH).
As a result, the Ethereum cryptocurrency has lost over 47% since the beginning of 2025, dropping from $3332 to $1748 — far more than many other altcoins. In comparison, the Solana cryptocurrency only dropped 26% over the same period, and Binance Coin dropped 15%.
Pectra update
To other reasons for the negative dynamics of activity and the Ethereum exchange rate, experts also include technical aspects, such as delays with a vital network update called Pectra.
The main goals of the Pectra update are to significantly improve the Ethereum network's scalability and introduce account abstraction (EIP-7702).
However, it is known that Ethereum developers have already successfully released the Pectra update on the Hoodi testnet at the end of March 2025. Earlier that month, the Hoodi testnet was launched for this very purpose. However, despite the successful deployment of Pectra in the testnet, the developers postponed the upgrade in the mainnet from April to May, which only increased investor tension on the already unfavorable background of the crypto market.
Is it that bad?
Despite the current negative assessment, many experts look at the future of Ethereum positively. For example, a well-known crypto analyst under the nickname Ash Crypto noted that the cryptocurrency ETH had already experienced a similar situation in late 2016 — early 2017, when the altcoin fell into the so-called "bear trap" but soon resumed its growth. According to the blogger, the Ethereum exchange rate is expected to rebound shortly, and a new wave of growth will follow. One of the crypto whales even opened a long position for $140 million against the background of the altcoin's fall.
At the same time, analytical services point to the accumulation of cryptocurrency ETH among large investors. For example, the Liveliness indicator data, which tracks long-term holders' activity, are at their lowest levels since February 2025, indicating active ETH accumulation.
Also, one of the largest investment companies in the world, Fidelity, which has $5 trillion in assets under management, announced plans to launch its own tokenized US government bond fund on the Ethereum blockchain.
After hitting a local low of $1415 in early April 2025, the Ethereum exchange rate returned to growth and by early May had risen by almost a quarter to $1761. The market capitalization of the leading altcoin reached $212 billion.
