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

• ETH bears imagine that low charges, L2 fragmentation, and competitors from BTC and SOL may dent the worth outlook.
• Nonetheless, ETH bulls foresee long-term demand and appreciation for the altcoin.

Ethereum [ETH] has had some bittersweet worth motion within the present market cycle. Between late 2023 and early 2024, the biggest altcoin rose greater than 150%, from $1,600 to $4K.

Nonetheless, general market headwinds and blended alerts from the SEC on ETH’s security standing in Q2 2024 negatively impacted sentiment. Regardless of a last-minute change in fact by the SEC and the profitable launch of the US spot ETH ETF, the altcoin’s worth has remained subdued.

ETH’s bull vs bear case

On the time of writing, ETH’s worth was beneath $3,000, and the crypto group appears divided on its worth prospects. As highlighted by Flip Analysis, the bull and bear camps have sturdy and compelling arguments.

The bear case of ETH

For the bear case camp, the market analysis analyst famous that ETH’s diminished income, L2 fragmentation, and direct competitors from Bitcoin [BTC] And Solana [SOL] didn’t bode nicely for the altcoin’s worth.

For context, after the Dencun improve, prices dropped and extra customers migrated to L2s.

‘Profitability has fallen after Dencun and it doesn’t appear like it will change quickly’

Nonetheless, L2s fragmentation has elevated, giving Solana’s monolithic chain a aggressive benefit and additional denting ETH’s worth prospects. Per Flip analysis,

‘At the moment, @l2beat is monitoring 71 L2s, 20 L3s and an unimaginable 82 upcoming launches. This considerably degrades the UX and turns into a serious barrier to widespread adoption. In the meantime, SOL has demonstrated the potential of a monolithic chain and ecosystem.”

Moreover, ETH is underperforming SOL and BTC, as evidenced by the declining SOLETH and ETHBTC ratios. This underlined the weak sentiment on the main altcoin, in response to Flip Analysis.

Supply: ETH/BTC ratio, TradingView

The ETHBTC ratio, which tracks the relative efficiency of ETH versus BTC, has fallen regardless of US ETH ETF approvals. This meant that ETH underperformed BTC over the identical interval.

ETH’s bull case

Nonetheless, ETH bulls have countered the bear camp with strong arguments. Flip Analysis famous that memes overshadowed the DeFi story. However a narrative shift was happening.

“ETH’s underperformance this yr has coincided with a rotation from DeFi to memes. Nonetheless, it seems the narrative is shifting.”

One other crucial level was that ETH was the one institutional high quality and confirmed chain. BlackRock’s curiosity in on-chain tokenization additional supported this argument.

“Lots of the brightest minds within the house are working collectively on the ETH roadmap. Any institutional onboarding will happen on ETH, be it RWAs and on-chain tokenization, prediction markets and so on.”

Coinbase analysts too projected a sustained long-term demand for ETH as its use in L2 protocols will increase.

“Present traits lead us to count on that demand for ETH will proceed to extend via different protocol-based avenues, resembling collateral within the money markets or buying and selling pairs in DEXs.”

For his half, Ali Muneeb, one of many pioneers of Bitcoin DeFi and Stacks [STX] founder, said that he would select Solana over Ethereum.

“I might select Solana over Ethereum any day.”

In the meantime, ETH consolidates above $2,500 for a second week as general crypto market sentiment stays weak. With strong arguments on either side, it stays to be seen whether or not ETH’s sentiment will enhance or not.