Alas, Ethereum (CRYPTO: ETH) is, on average, an infuriating coin to hold. If you’d invested a meaty sum of $4,000 into it 12 months ago, today you’d have a grand total of $1,859 and probably some sour questions about your life’s decisions. If you bought it as far as 36 months back, you’d still have just $2,959 or so — and you’d doubtlessly be even more impatient to get a return from it after having seen its price crater in recent weeks.

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But what about the most likely performance coming in the next year or so? Unfortunately, you might see your money cut in half again. Here’s why.

What’s going wrong will take time to fix

The problem of the moment for Ethereum is that sentiment can’t seem to stop going from bad to worse thanks to the downwardly mobile price action that’s been going on for many months now. But that shouldn’t concern investors too much, as sentiment is inherently fickle. The deeper issue is that the bad sentiment surrounding this coin has its origins in the chain’s real stumbling blocks.

For a coin to grow, there needs to be demand from investors and blockchain developers. Investors buy the coin because they think it’ll go up as a result of the quality of the underlying technology, the presence of value-generating drivers of demand, and because they expect that the developers will continue to innovate and produce projects that will attract people to use the chain. Developers, on the other hand, choose to build their cryptocurrency projects on chains where they’re familiar with the programming languages required, where they can expect investors to provide their projects with capital, and where it’s convenient to make, test, and launch applications.

Ethereum is currently struggling across all of those fronts with both of those key groups. In terms of its technology, it’s true that it’s the chain with the most extensive smart contract functionality. That means it could, in theory, be a leader in decentralized finance (DeFi), artificial intelligence (AI) agents on the blockchain, and many other important, emerging segments of the cryptocurrency market.

The problem is that neither developers nor investors have a friction-free experience when they interact with the chain. In fact, it’s usually the opposite.

The chain’s gas fees remain very high in comparison to competitors like Solana, which also has essentially the same set of features. Furthermore, transaction times remain far slower than Solana, and the ecosystem of tools for developers and investors alike is of similar quality across the two chains. As of March 14, swapping tokens on Ethereum costs $0.44 on average and roughly a penny on Solana.

Despite Ethereum’s leadership initiating multiple campaigns over the years to control transaction costs and reduce transaction times, the chain is still very slow and expensive compared to its peers. Despite the chain’s leadership switching up recently in the name of fostering better technical development and better integration with its project ecosystem, positive changes will probably take a good while to play out, assuming they do.

While it’s true that there’s simply a lot more capital available to access on Ethereum, as its market cap is $229 billion compared to Solana’s $65 billion, that gap could well close over time if the current situation persists.

Try not to catch this falling knife even if you’re brave

It’s very tempting to buy the dip with Ethereum given that it’s the second-largest cryptocurrency.

The odds of it recovering its value over the long term are high. Its leadership team will probably be able to make further headway on the chain’s problems, which will mitigate some of its problems even if it never reaches the same speeds or low costs as Solana or other competitors. Further development of its smart contract capabilities could still position it as the chain to beat in future growth areas. The bulk of the capital parked on the chain isn’t going to uproot itself until the future dominance of a competitor is undeniable, which hasn’t happened yet.

But there are not any signs of a recovery to place your confidence in just yet. And that means if you’re looking to cut your investment dollars in half, now’s a great time to buy. Even if you’re the daring or contrarian type of investor, don’t bet the farm on Ethereum today. A very small nibble might be appropriate, but there’s absolutely no rush.

Otherwise, keep an eye on this one. Within a year, there could be green shoots, likely in the form of announcements of major tech upgrades to the chain. Until then, steer clear.

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Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.