Key Points
- Ethereum traditionally thrives in Q1, but growth has been slowing down recently.
- Despite significant capital influx, Ethereum’s value has declined, putting its long-term prospects at risk.
Ethereum’s historical performance in the first quarter of the year has been strong, often seeing returns double. However, this year may prove to be different as growth appears to be slowing down.
On Election Night last year, Ethereum recorded a significant increase, its most substantial in three months, closing at $2,721. However, it is now 20% off its peak of $4,015 from that rally.
Ethereum’s Q1 Performance
Ethereum has consistently performed well in Q1, with returns often doubling or even tripling in the last four years. In 2023, Ethereum rose by 54%, hitting $1,800 by the end of the quarter. However, 2021 remains the standout year, with Ethereum surging by 160% to $1,920 in just three months.
However, growth has slowed since then, and year-on-year returns are also decreasing, causing a predicament for those holding onto their Ethereum. This change in sentiment is evident in the Coinbase Premium Index (CPI), which indicated a slowdown in buying momentum.
Current Market Conditions
Even though the crypto market cap hit a record high of $3.70 trillion during last year’s post-election rally, Ethereum’s buying frenzy among U.S investors barely affected the CPI. This suggested a decrease in enthusiasm across the board.
Four years ago, Ethereum’s market cap hit $500 billion, with its price soaring to $4.76k. Today, it’s down 22%, trading at $3.2k. With quarterly returns cooling off, the patience of those holding onto their Ethereum is being tested as Ethereum struggles to break past significant psychological levels.
Despite the market-wide rebound, Ethereum’s failure to breach $4k contrasts sharply with XRP, which has already surged by 53% in Q1. Investors are clearly seeking higher returns, and other high-cap cryptocurrencies are stepping up to deliver.
The Future of Ethereum
Zooming in, XRP’s market cap has surged to a new all-time high of $180 billion, now half of Ethereum’s. Meanwhile, Ethereum has slipped by 3% since the start of the year. At this pace, XRP could soon surpass Ethereum.
Despite 540k Ethereum being withdrawn and $1.84 billion in fresh capital entering the market, Ethereum has still seen a 2% decline over the past month. The balance on exchanges also hit a new all-time low. The lack of bullish movement is clear, putting Ethereum’s long-term outlook at risk.
Long-term holders (LTHs) have increased their positions by 75% over the past year. However, with returns falling short, these LTHs may soon exit, making the $4k-level a critical test for Ethereum in the coming days.
