During the current market cycle, Ethereum [ETH] has faced significant difficulties due to mounting fear, uncertainty, and doubt, leading investors to shift their focus elsewhere.
According to Zaheer Ebtikar, an expert at Split Capital, ETH has fallen behind its counterparts due to what he calls a ‘middle child syndrome.’
“$ETH is experiencing challenges associated with being the middle child. It has lost favor with institutional investors, lacks support from crypto private investors, and retail traders are notably absent in significant bids for this asset.”
Investor Exodus from ETH
Among the leading cryptocurrencies, ETH has only provided an 8% return year-to-date, a stark contrast to the double-digit gains witnessed in Bitcoin [BTC] and Solana [SOL].
Ebtikar attributes this underperformance to investors shifting their attention to BTC and competing assets like SOL and Sui [SUI].
He highlights three primary sources of capital in the crypto sphere: institutional investors (via ETFs/futures), private investors (venture capital, liquid funds), and retail traders, with the first two currently holding the most influence.
Institutional capital is heavily concentrated on BTC (through ETFs), while ETH ETFs have experienced negative flows of $546 million since their introduction in July, indicating low interest.
Conversely, private investors view ETH as overvalued and have redirected their investments towards perceived undervalued competitors such as SOL, Celestia [TIA], and SUI.
“$ETH’s size hampers direct support from its native capital, which is now being directed towards assets like $SOL and other large cryptocurrencies like $TIA, $TAO, and $SUI.”
Coinbase analysts also echo these sentiments in their latest report from September.
The SOL-ETH ratio, tracking SOL’s value relative to ETH, has surged over the past year, supporting Ebtikar’s theory that investors have possibly shifted their focus from ETH to SOL.
Nevertheless, Ebitaker also notes that ETH remains the only altcoin with an approved ETF in the US.
He anticipates a potential resurgence of interest in ETH, particularly from institutional investors, starting in 2025.
Factors such as heightened demand from ETF purchasers, changes within the Ethereum Foundation, and evolving market conditions could contribute to this revival.
As of now, ETH is priced at $2.4k and has been fluctuating between $2.3K and $2.5K since the start of October.