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Ethereum’s bull vs bear case: What’s next for ETH price?


  • ETH bears believe that low fees, L2 fragmentation, and competition from BTC and SOL could dent price prospects. 
  • However, ETH bulls foresee a long-term demand and value appreciation for the altcoin. 

Ethereum [ETH] has had a bittersweet price action in the current market cycle. Between late 2023 and early 2024, the largest altcoin rallied over 150%, jumping from $1600 to $4K. 

However, overall market headwinds and the SEC’s mixed signals on ETH’s security status in Q2 2024 dented its sentiment. Despite a last-minute pivot by the SEC and the successful launch of US spot ETH ETF, the altcoin’s price has remained muted. 

ETH’s bull vs bear case

At the time of writing, ETH’s value was below $3K, and the crypto community seems divided on its price prospects. As highlighted by Flip Research, the bull and bear camps have strong and compelling arguments. 

ETH’s bear case

For the bear case camp, the market research analyst noted that ETH’s reduced profits, L2 fragmentation, and direct competition from Bitcoin [BTC] and Solana [SOL] didn’t bode well for the altcoin’s value. 

For context, after the Dencun upgrade, fees dropped, and more users migrated to L2s. 

‘Profitability has dropped off a cliff post-Dencun, and it doesn’t look like that will change soon’

However, L2s’ fragmentation has intensified, giving Solana’s monolithic chain a competitive edge and further denting ETH’s price outlook. Per Flip Research,

‘Currently @l2beat is tracking 71 L2s, 20 L3s, and an incredible 82 upcoming launches. This is substantially degrading UX, and becoming a significant barrier to widespread adoption. Meanwhile, SOL has shown the potential of a monolithic chain & ecosystem.’

Additionally, ETH has been underperforming SOL and BTC, as shown by the declining SOLETH and ETHBTC ratios. This underscored weak sentiment on the leading altcoin, per Flip Research. 

ETH

Source: ETH/BTC ratio, TradingView

The ETHBTC ratio, which tracks ETH’s relative performance to BTC, has decreased despite the US spot ETH ETF approvals. This meant that ETH underperformed BTC over the same period. 

ETH’s bull case

However, ETH bulls have countered the bear camp with solid arguments. Flip Research noted that memes eclipsed the DeFi narrative. But a narrative shift was underway. 

‘ETH’s underperformance this year has coincided with a rotation from DeFi to memes. However, it looks like the narrative may be shifting.’ 

Another critical point was that ETH was the only institutional-grade and battle-tested chain. BlackRock’s interest in the chain for on-chain tokenization further supported this argument.  

‘Many of the smartest minds in the space are collaborating on the ETH roadmap. Any institutional onboarding will be done on ETH, whether it be RWAs and on-chain tokenisation, prediction markets etc.’ 

Coinbase analysts also projected a continued demand for ETH in the long run as usage in L2 protocols surges. 

‘Current trends lead us to expect continued strength in ETH demand from other protocol-based avenues such as collateral in money markets or trading pairs in DEXs’ 

However, on his part, Ali Muneeb, one of the pioneers of Bitcoin DeFi and Stacks [STX] founder, said that he would pick Solana over Ethereum. 

‘I’d pick Solana over Ethereum any day.’

Meanwhile, ETH has been consolidating above $2500 for the second week as overall crypto market sentiment remains weak. With solid arguments on both sides, whether ETH’s sentiment will improve or not remains to be seen. 


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