Ethereum has witnessed several exciting developments throughout 2024, shaping its network and users amid technological innovations, regulatory challenges, and new financial instruments. This year has offered numerous events impacting Ethereum’s dynamics, and the future of this leading cryptocurrency is under intense scrutiny.
A key technical advancement came with the Dencun upgrade, implemented in March 2024. This upgrade introduced Proto-Danksharding (EIP-4844), aimed at reducing costs and improving efficiency on Layer-2 networks, such as Arbitrum and Optimism. Layer-2 solutions offload the main blockchain (Layer-1), enabling quicker and cheaper transactions. Thanks to the Dencun upgrade, transaction fees on these Layer-2 networks plummeted by as much as 90%, attracting users who previously viewed high costs as barriers.
Another significant milestone for Ethereum was the approval of Spot-ETFs by the U.S. SEC in July 2024, representing a pivotal moment for Ethereum’s mainstream acceptance. These ETFs allow investors to invest directly in ETH without needing to hold the cryptocurrency, thereby simplifying access for institutional investors. Within the first three days of approval, over $200 million flowed to these funds, signaling growing interest beyond traditional crypto markets. Yet, contrary to the soaring post-approval price hikes seen with Bitcoin ETFs, the approval did not trigger significant price increases for ETH.
Despite these promising innovations, Ethereum's price performance has fluctuated. Although it briefly surpassed $4,000 in December 2024, it remained below its all-time high of $4,865 reached in 2021. By December 29, the price settled at $3,358, reflecting concerns among investors. While some analysts predict rises beyond $5,000 by 2025, others caution against accelerated growth, voicing worries over unresolved regulatory and technological challenges.
Ethereum’s relationship with the SEC continued to be fraught throughout 2024. The Ethereum Foundation faced increased regulatory scrutiny, influencing its public perception and operational stability. Similarly, software provider Consensys, known for its MetaMask wallet, faced legal action from the SEC for alleged securities law violations, prompting them to file a counterclaim. Although the SEC lawsuit was dismissed in September, it did not alleviate the stress felt across the organization; Consensys announced layoffs of 20% of its workforce, attributing this to the regulatory pressures.
The political climate also played a significant role, as Donald Trump’s election victory in November reignited discussions surrounding crypto regulations. Trump pledged to position the U.S. as the leading nation for digital assets, indicating potential changes favorable to Ethereum’s adoption. His support of World Liberty Financial (WLF), a DeFi project built on Ethereum, highlights the intertwining paths of politics and cryptocurrency.
Looking forward, Ethereum faces substantial challenges, including growing competition from other blockchain platforms and the rising use of Layer-2 solutions, placing pressure on its Layer-1 blockchain value. Critics argue for the necessity of reevaluated fee structures to maintain competitiveness. Nonetheless, the approval of ETFs and political backing could pave the way for enhanced acceptance and growth within the Ethereum ecosystem.
Overall, 2024 illustrated unfulfilled potential for Ethereum. A transformative year lies just over the horizon. 2025 presents opportunities to conquer both technical and regulatory hurdles as the platform strives for sustained growth, which is more imperative than ever for achieving its market aspirations.