The year 2024 proved challenging for Ethereum (ETH), despite a 46% price increase. The network faced setbacks against Bitcoin (BTC) and competing blockchains. This report explores ETH's financial trends, institutional adoption, on-chain activity, and evolving tokenomics.
Financial Performance Overview
- Starting Price (Jan 2024): ~$2,280
- Annual Peak (Q1): ~$4,100 (+80%)
- Lowest Point (Sept): $2,100 (-8% YTD)
- Year-End Rally: Surged to $4,000 (+60% Nov–Dec)
The Dencun upgrade (March 13) improved Layer 2 scalability but reduced fee revenue, triggering ETH inflation. Institutional interest grew with spot ETF approvals (May 23), though retail participation lagged.
👉 Ethereum spot ETFs: A game-changer for institutional adoption?
Ethereum Spot ETFs: A Slow but Steady Start
Key Milestones:
- May 20, 2024: Analysts predicted SEC approval.
- July 23, 2024: Trading launched with 8 issuers (BlackRock, Fidelity, Grayscale).
- Year-End AUM: $11.5B (+29.5% since launch).
Despite slower initial traction compared to Bitcoin ETFs, net inflows rebounded post-election, with $34B total trading volume by December.
On-Chain Activity: Growth and Competition
| Metric | Jan 2024 | Dec 2024 | Change |
|---|---|---|---|
| TVL | $38B | $86B | +147% |
| Weekly Transactions | $3B | $9B | +200% |
| Active Addresses/Week | 400K–600K | Stable | – |
Dencun’s Impact:
- Reduced Layer 1 fees but boosted Layer 2 adoption.
- Solana surpassed Ethereum in DEX volume and active users.
👉 How Layer 2 solutions are reshaping Ethereum’s ecosystem
ETH Tokenomics: Is Deflation Sustainable?
Since The Merge (2022), ETH’s deflation relied on fee burns (EIP-1559). However:
- March 2024: Inflation resumed post-Dencun.
- Cause: Lower Layer 1 fees → fewer ETH burned.
Investor Concern: The "ultrasound money" narrative weakens if Layer 2 dominance continues.
FAQ: Ethereum in 2024
1. Why did ETH underperform BTC?
Institutional focus initially favored Bitcoin, and Dencun’s fee reductions dampened ETH’s deflationary appeal.
2. Are Ethereum spot ETFs successful?
Yes, but growth was gradual. AUM tripled after November’s market rally.
3. Will Layer 2 adoption hurt ETH’s value?
Short-term: Possibly. Long-term: Scalability may attract more users to Ethereum’s ecosystem.
Conclusion
2024 highlighted Ethereum’s scalability progress and institutional milestones, but inflationary pressures and competition pose challenges. The network’s ability to balance Layer 2 growth with Layer 1 sustainability will be critical in 2025.