Ethereum (ETH): Market report for 2024
January 13, 2025
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The year 2024 ended on a sour note for Ethereum (ETH). Despite a price increase of 46%, it is down 34% on Bitcoin (BTC). What's more, the network is losing ground to other blockchains. In this report, we take a look back at 2024 for Ethereum.
Foreword: This article is partly based on our 2024 year-end report on the cryptocurrency market. We encourage you to read it for free or get a physical copy to support our work.
Financial Analysis of ETH
The year 2024 began with Ether (ETH) trading around $2,280, in a context where investor interest in Ethereum was surprisingly low despite major anticipated developments. During a bullish first quarter for the market, ETH reached an annual high of approximately $4,100.
On March 13, Ethereum implemented the Dencun update, one of the most anticipated steps since The Merge (in September 2022) and Shapella (in April 2023). To put it simply (we will explore this in more detail later in the report), Dencun aimed to enhance scalability and drastically reduce transaction fees on layer 2 networks. The success was almost immediate, but it led to a drop in Ethereum's revenues, causing a return to inflation for ETH.
Despite a record low in retail investor interest, May marked the beginning of an institutional dynamic for Ethereum. On May 23, the SEC approved the 19b-4 forms of eight major Ethereum spot ETF issuers, including BlackRock, Fidelity, and Grayscale. This decision was unexpected given the aggressive regulatory stance taken by the U.S. regulator against the cryptocurrency sector. Nevertheless, on July 16, the SEC announced that Ethereum spot ETFs would begin trading on July 23.
Despite this institutional breakthrough, Ethereum experienced a period of weakness between May and September. During this bearish trend, Ether's price dropped to $2,100, below its January 1 level. Similarly, gas fees (often indicators of on-chain activity) reached their lowest level in five years at the end of summer. This fee reduction impacted Ethereum's economy, as lower fees mean less ETH is burned, increasing the circulating supply. Consequently, the total supply of ETH has been on a steady rise since April, a concerning trend given that ETH deflation has been a key argument for investors.
This concern becomes even more striking when comparing Ether to Bitcoin, with ETH underperforming by 33% between January and October 2024. However, the market began gaining momentum from late August, and Ethereum’s revival became evident in November. ETH's price rose from $2,500 on November 1 to over $4,000 in December (+60%), regaining 11% against BTC.
Ethereum Spot ETFs
Announced on May 20, 2024, by experts Eric Balchunas and James Seyffart, confirmed by the SEC on May 23, and officially launched on July 16, 2024, Ethereum spot ETFs did not immediately achieve the success of their Bitcoin counterparts. Their start was more moderate, notably due to the disappointing performance of Grayscale's ETHE fund, a former Trust converted into an ETF.
One of the main reasons is that investors predominantly focused on Bitcoin, waiting for clear signals to shift their capital towards Ether (much like retail investors waiting for the right moment to move into altcoins). By the end of 2024, following Donald Trump's election, ETH's price finally saw an encouraging uptrend, sparking renewed demand for Ethereum spot ETFs.
By the end of 2024, Ethereum spot ETFs had accumulated $34 billion in total trading volume and experienced growing net inflows, with 8 out of 9 ETFs in positive territory. The total assets under management (AUM) exceeded $11.5 billion, a 29.5% increase compared to July 23, 2024, the launch date. This is a significant achievement, especially considering the AUM had dropped to $5.7 billion between September and November, mainly due to massive sales of Grayscale's ETF.
→ See also our review of spot ETFs in cryptos in 2024 and our forecast for 2025 :
Spot ETFs in cryptos: review of 2024 and forecasts for 2025
Spot ETFs in the United States catalyzed the cryptocurrency market's growth in 2024, providing institutional investors with a regulated investment path for Bitcoin (BTC) and Ethereum (ETH). This article reviews the state of spot ETFs in 2024 and offers insights into their potential trajectory in 2025.
Analysis of Ethereum On-Chain Activity
On January 1, 2024, Ethereum's TVL stood at approximately $38 billion. It rose by more than 147% throughout the year, reaching $86 billion at the end of December. This growth surpasses the 72% price increase of ETH over the same period, indicating a return of capital to the ecosystem.
However, the implementation of the Dencun update on Ethereum in March 2024 led to a decrease in fees (and consequently, revenue). Revenues fell from over $600 million in March to approximately $120 million in May. Overall, activity declined, enabling Solana to surpass Ethereum on almost all key indicators: active users, transaction volume, DEX activity, and, for the first time in November, blockchain-generated revenue.
As for Ethereum, transaction volume on the network increased from approximately $3 billion per week to about $9 billion at year-end before dropping again. The number of active addresses ranged between 400,000 and 600,000 per week. Overall, these metrics remained stable in 2024.
It is important to note that Ethereum remains the dominant player in the blockchain sector. While Solana succeeded in attracting numerous users in 2024 (enabling it to achieve superior on-chain metrics), some indicators still favor Ethereum. The network holds $125 billion in circulating stablecoins, the majority of the $215 billion total.
Is Ether Deflation Over?
Since The Merge update in October 2022, Ethereum has operated under a Proof of Stake model, introducing significant deflationary pressure on ETH’s total supply. This mechanism relies on burning a portion of transaction fees via EIP-1559, thereby reducing the circulating supply. However, 2024 marked a turning point in this dynamic, with a gradual attenuation of deflation.
At the beginning of 2024, Ethereum's deflationary pressure was still notable, with a peak in March 2024 when on-chain activity reached record levels. However, the Dencun update drastically changed this mechanism. By significantly lowering transaction costs on layer 2 networks, it encouraged user migration to these networks, also reducing fees generated on Ethereum. While the scalability improvements are undeniable, this had an unintended consequence: a decrease in the amount of ETH burned.
By late March 2024, Ether had become inflationary again—a first since The Merge. Investors are closely monitoring this trend, as it could influence ETH’s valuation in the medium and long term. This reversal raises questions about the sustainability of the "ultrasound money" thesis, particularly in a context where layer 2 solutions play an increasingly dominant role in Ethereum’s ecosystem.
Indeed, the deflationary aspect of Ether, long considered a differentiating factor compared to Bitcoin, now faces structural limitations. If layer 2 solutions continue to grow and attract users, transactions on layer 1 may remain moderate, reducing the impact of fee burning on ETH's total supply.
→ Find also our analysis of the most important Pectra EIPs for Ethereum:
