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In the world of cryptocurrencies, no major asset has been mired in a fundamental identity dispute for as long as Ethereum (ETH). Bitcoin’s (BTC) status as digital gold is almost solid, but what exactly is ETH? Is it the native fuel of a public chain, or an independent currency asset? This debate has reached unprecedented intensity in 2025. In March this year, the market even experienced a very symbolic scene: XRP's fully diluted valuation briefly surpassed ETH. Although this ignores the fact that most XRP tokens are not yet in circulation, the moment still stunned many observers. Then, in April, the ETH/BTC exchange rate fell below 0.02, returning to early 2020 levels. This means that all the gains that ETH accumulated relative to BTC during the last bull market cycle have been completely wiped out. Price charts grimly show that market sentiment has dropped to freezing point. Price weakness is just a symptom, and the deeper concerns come from the erosion of fundamentals. With the strong return of Solana and the rise of cutting-edge chains such as Hyperliquid, Ethereum’s share in the key battlefield of blockchain fee income continues to shrink. By this year, its share has slipped to fourth place in the public chain field, accounting for only about 17%. This is not just a drop in numbers, but a clear signal that economic activity and developer attention are shifting. Ethereum is facing the toughest competitive landscape in its history. The market pendulum always swings equally sharply in the opposite direction. When "ETH failure theory" becomes the mainstream narrative, a turning point is often brewing. In May, the market got its first clear signal of a reversal. The bears' excessive pessimism proved short-lived. Since then, ETH has embarked on an impressive rebound: the ETH/BTC exchange rate has soared from a low of 0.017 in April to 0.042 in August, an increase of 139% ； At the same time, the price of ETH against the US dollar soared from US$1,646 to a historical peak of US$4,946, perfectly explaining the market rule of "the deeper it falls, the higher it bounces". Behind this price revival is the infusion of two key structural forces that have reshaped ETH’s demand narrative. First of all, the once neglected spot ETH ETF has seen a fundamental reversal in capital inflows. Although the total inflow for the year ($9.72 billion) is still less than that of the BTC ETF, the relative attractiveness of the ETH ETF is actually stronger when considering the nearly five-fold market value gap between the two. Especially in the three months from the end of May to the end of August, its capital inflows even exceeded the BTC ETF in the same period. This completely refutes the argument that "institutions lack interest in ETH" and shows that a large number of funds are accepting ETH in a more traditional and stable way. Also a more revolutionary change is the rise of digital asset libraries (DATs) focusing on ETH. Such entities use ETH as a strategic reserve asset for long-term and continuous purchases, creating an unprecedented rigid demand. Among them, Bitmine, led by Tom Lee, has the most radical transformation, accumulating more than 3.6 million ETH in a few months, becoming one of the largest single holding entities. DATs behave differently than speculators chasing hot money, and they provide a solid, enterprise-level support for ETH’s price bottom, a solid foundation that is lacking in narrative-driven bull markets. The strong rebound failed to end the core controversy. As of the end of November, the price of ETH has fallen from its high point and has still failed to break through the historical peak of the previous cycle, while BTC has long been firmly above new highs. This exposes the fragility and contradiction of ETH's recovery: Its rise is not due to a breakthrough in the utility of its own public chain (the fee share is still being lost), but to the market beginning to price some of it as a "Bitcoin-like" monetary asset. In other words, the current currency premium of ETH is essentially a dependency premium. The market seems to have reached a temporary consensus: on the premise that BTC proves that the digital currency narrative is feasible, ETH can serve as a high-beta, high-risk supplement or leveraged expression of that narrative. The data confirms this: throughout 2025, the price correlation between ETH and BTC has always remained at a very high level (0.7-0.9), and its beta coefficient often exceeds 1.8, which means that when BTC fluctuates, ETH fluctuates even more. The current situation creates a clear paradox: ETH’s monetization path is being accepted by the market, but this acceptance is dependent on the continued success of BTC’s monetary narrative. It has yet to prove that it has macro-driven logic independent of BTC. Its value acquisition method has changed from the direct capture of ecological value through "burning fees" as envisaged in the past, to a more indirect "status granting" that relies on social consensus. The story of ETH is far from over. The accumulation of DATs may be just the beginning, and they are expected to be leveraged through more financial instruments (such as convertible bonds), further amplifying the demand for ETH. As long as BTC’s bull narrative continues, ETH has a clear path to catch up and could post stunning gains due to higher beta. For ETH to win an independent currency status alongside BTC, it must demonstrate the courage and ability to decouple from BTC over a longer period of time. Until then, it is still the most powerful but also the most contradictory "secondary currency asset" in the cryptocurrency world, continuing its own unfinished battle between the shadow of Bitcoin and the dawn of its own ecology. |
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