Once A Leader, Now A Liability? Ethereum Declines In A Changing Market
May 2, 2025
Is Ethereum Losing Its Edge? Rival Layer 1’s Gain Ground
Once hailed as the backbone of decentralized applications and smart contracts, Ethereum is showing signs of distress.
While it remains the second-largest cryptocurrency by market capitalization, its lead is rapidly eroding as ‘Layer One’ competitors like Solana and Cardano gain ground.
Simultaneously, institutional investors are increasingly pivoting to Bitcoin. Two Prime, an SEC-registered investment advisor, recently announced it was abandoning Ether entirely in favor of a Bitcoin-only strategy.
Two Prime, known for its curated Bitcoin derivatives strategies and transparent investment approach, cited Ethereum’s declining reliability and increased volatility as key reasons for the move.
CEO of Two Prime, Alexander Blume, argued that ETH now trades more like a meme coin than a foundational asset, showing erratic behavior that has decoupled it from Bitcoin.
“ETH’s statistical trading behavior, value proposition, and community culture have failed beyond a point that is worth engaging,” the firm stated.
ETH is down 45% year-to-date, and its ETF demand has lagged behind Bitcoin’s by a factor of 24, further signaling a waning institutional appetite.
Solana Gains Ground on Ethereum With Speed and User Growth
At the same time, Solana is gaining momentum.
Although still far behind, Solana now outpaces ETH in daily active users, transactions, and wallet growth.
Solana’s technical edge makes it the increasingly preferred platform for real-time decentralized applications. Its upcoming Firedancer upgrade promises to push throughput beyond 1 million transactions per second, further reinforcing its lead on performance metrics.
Ethereum Speeds Up Upgrades in Bid to Regain Momentum
Ethereum isn’t giving up just yet.
The Ethereum Foundation, now under the leadership of co-executive directors Hsiao-Wei Wang and Tomasz Stanczak, has rolled out a strategic overhaul to revitalize the protocol.
The plan is to speed up Ethereum’s upgrade schedule, reducing the time between updates from over a year to just six months, while rolling out major improvements to make the network faster and easier to use.
Behind the scenes, the team is also making changes to work more efficiently by giving team leads more responsibility and simplifying the development process. They’re also focusing on bringing developers into the conversation earlier to help shape practical solutions.
“[Bitcoin] Has No Real Competitor in Digital Assets”
Meanwhile, Bitcoin continues to pull away from the rest of the market.
A pricing model, developed by Bitcoin Custody Company 21st Capital, suggests that Bitcoin’s price increases roughly sixfold for every 40% increase in network age. If the pattern holds, Bitcoin could reach $351,000 by 2025.
Bitcoin’s appeal continues to grow, fueled by rising institutional adoption and strong backing from financial leaders like BlackRock’s Larry Fink and Commerce Secretary Howard Lutnick, the former CEO of Cantor Fitzgerald.
Blume said himself, “Bitcoin stands alone in its use case. It has no competitor in digital assets.”
Bitcoin Takes the Lead as Ethereum’s Future Grows Uncertain
Stacy Herbert, director of El Salvador’s Bitcoin Office, said many are “wasting time building on Ethereum and its Layer 2 tokens, while investors simply aren’t buying in.”
Bitcoin is emerging as the clear institutional favorite, while Ethereum struggles to redefine its role amid fierce competition and internal reform. As rivals like Solana close the gap and macroeconomic forces reward predictability over experimentation, Ethereum’s dominance is no longer assured, and its future is increasingly in question.
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