Ethereum has long been the second-largest cryptocurrency by market capitalization behind only bitcoin. It’s also widely viewed as one of the most credible crypto currencies. It’s among those with the most utility and impressive rates of adoption.
Despite those factors, some investors have a tendency to view it as second fiddle to bitcoin. Regarding returns, ethereum could shed that status this year. It may act as a leader among large-cap digital currencies, according to some market observers.
Some of that thesis revolves around increased institutional adoption of ethereum. And that is supported by ETFs like the VanEck Ethereum ETF (ETHV ) and the Grayscale Ethereum Mini Trust ETF (ETH ), among others. Ether ETFs have brought the cryptocurrency to a broad audience of investors. But in terms of 2025 catalysts, those funds are part of a broader picture.
Fundamentals, Layers Support Ethereum Outlook
Ethereum is often viewed as a competitor to bitcoin. Yet some professionals view solana as the more credible rival to ether. Both ether and solana — the latter more recently — have been highlighted in memecoin mania. But the former has the superior long-term fundamentals, according to the Fidelity Digital Assets Research team.
“An important caveat here is that a large portion of Solana’s revenue comes from memecoin trading, which we view as a cyclical trend that remains strong during bull markets but pulls back significantly during bear markets,” observed Fidelity. “However, a similar argument could be made for Ethereum’s main use case being Uniswap. While these use cases are similar, we believe Ethereum fundamentals are slightly less dependent on speculation and may be less volatile over the long term.”
Fidelity also highlighted the relationship between ethereum and Layer 2, which can act as a driver of increased activity on the ethereum blockchain due to lower transaction costs.
2025 Network Upgrades Could Be Catalysts
“While many investors focused on cash flows may view Layer 2s as value-extractive, we think of the relationship between Layer 2s and Ethereum as mutualistic,” added Fidelity. “The base layer benefits from Layer 2s providing cheap transaction execution and furthering the distribution of the ether token while being able to keep the core ethos of decentralization intact.”
Fidelity acknowledged that solana likely possesses more short-term tailwinds than ethereum, with memecoin enthusiasm helping the former. But the latter brings a stable monetary outlook to the table. And some 2025 network upgrades could be catalysts for broader adoption and fee stability.
“The most positive improvement for investors to consider is the increase in blob count to a target of six and a maximum of nine,” concluded Fidelity. “This should provide Layer 2s with enough runway to remain aligned with Ethereum until PeerDAS is ready to be implemented. This aligns with our projection of significantly more Layer 2s coming online along with their further specialization.”
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