Ethereum’s Ether Sees Waning Investor Confidence – Here’s Why

The likelihood of Ethereum’s ether (ETH) surpassing $4,000 by the end of December remains slim, with market data suggesting only a 10% chance of achieving this milestone, according to Amberdata’s latest research.

Despite bitcoin (BTC) soaring to record highs above $90,000 and gaining 109% this year, ETH has underwhelmed, climbing just 36% and lagging far behind its 2021 peak of $4,832. At its current level of $3,100, ether remains mired in a performance gap that continues to disappoint investors.

Amberdata’s analysis of options trading on Deribit underscores the bleak sentiment, with traders pricing in minimal probabilities for ETH to breach $4,000 by Dec. 27. This tepid outlook reflects what Amberdata’s Director of Derivatives, Greg Magadini, calls a “fundamental misalignment” in Ethereum’s current ecosystem.

“The narrative of deflationary supply from Ethereum’s fee burn has reversed due to the dominance of layer-2 activity over the primary layer-1 chain,” Magadini explained. “This shift has deflated demand for ETH itself and significantly weighed on its price trajectory.”

Adding a potential ray of hope, Ethereum researcher Justin Drake recently introduced the “Beam Chain” proposal, which could eventually shorten block times to four seconds from the current 12. This change, if implemented, would enable higher throughput on Ethereum’s main chain, possibly increasing layer-1 activity and addressing current supply concerns. However, with development timelines stretching into years, the impact of Beam Chain remains a distant prospect.

Meanwhile, bitcoin’s upward momentum could still act as a catalyst for ETH’s price, nudging it closer to $4,000. However, such gains may be muted and leave ETH underperforming BTC—a trend that has persisted throughout 2024.

As the year-end approaches, ether’s outlook remains overshadowed by its struggles to regain its footing, both fundamentally and competitively, within an evolving crypto landscape. Whether potential policy shifts under a Trump-led administration or future network upgrades can rekindle enthusiasm for ETH remains an open question.