Ethereum hits rock bottom, Trump family also takes a 'direct hit'... Is recovery possible?

While the cryptocurrency market is generally showing a downward trend, ETHEREUM (ETH), the second-largest cryptocurrency by market capitalization, has fallen to the $1,800 level. This is the first time since November 2023. Industry experts believe that the Fectra upgrade and the introduction of Ethereum exchange-traded fund (ETF) staking functionality will be the long-term drivers for the rise in ETH prices.





As of 4:10 pm on the 11th, based on CoinMarketCap, ETH recorded $1,884.68, down 5.96% from the previous day. ETH last recorded the $1,800 level in November 2023, about 14 months ago. ETH, which was trading around $3,300 at the beginning of this year, has plunged about 43% in about 3 months.

The main reason for the decline in ETH prices is the deterioration of risk asset investment sentiment due to concerns about the global economic recession. Experts analyzed that ETH fell along with the stock market due to the waning effect of the Trump administration's Bitcoin policy and macroeconomic instability. In addition, the outflow of liquidity to competing blockchains such as Solana, which gained popularity in the meme coin ecosystem, also affected the weakness of ETH.



As ETH plummeted, the Trump family's DeFi project World Liberty Financial (WLFI) also suffered significant losses. According to crypto data firm Dropstep at the same time, WLFI holds a total of 12,074.77 ETH, accounting for 29.85% of its total assets. WLFI's average ETH purchase price is $3,396.03, and the loss from ETH on that day was about $18.04 million (about 26.2 billion won). Considering that WLFI's total portfolio loss is about $87.03 million (about 126.5 billion won), the loss from ETH accounts for about 20.73%.



Experts forecast that while ETH prices are showing a short-term downward trend, there are several positive factors that will drive a price rebound in the mid-to-long term. In particular, the Fectra upgrade scheduled for the first half of 2025 is expected to be a positive factor.

Kim Byung-jun, a researcher at Dispread, said, "Fectra will lay the groundwork for Ethereum to attract more users by improving usability, stability, and scalability." He focused on the account abstraction feature included in this upgrade. Account abstraction is a technology to overcome the limitations of existing cryptocurrency wallets, allowing users to easily use services without going through a complex process. If anyone can easily use Ethereum-based dApps, the expansion of the Ethereum user base and the increase in network transactions can have a positive impact on ETH prices.

The Fectra upgrade, which was originally scheduled for mid-this month, has been temporarily suspended after a bug was found in the testnet last week. However, experts are optimistic based on Ethereum's past successful upgrade cases.

Jang Kyung-pil, head of the research center, said, "Compared to the Merge that transitioned from Proof-of-Work (PoW) to Proof-of-Stake (PoS) or the Dankun upgrade that introduced data blobs, the technical difficulty of Fectra is relatively low." He analyzed that "given the smooth progress of past upgrades, there is a high possibility that this upgrade will also be successfully carried out." Kim Byung-jun, a researcher at Dispread, also said, "It is difficult to definitively determine the success of the upgrade, but the Ethereum development community has the experience to overcome various technical challenges, so the problem can be sufficiently solved," and "Ethereum's technical progress will continue in the long run."

The consideration of adding staking functionality to Ethereum exchange-traded funds (ETFs) is also positive. Last month, Grayscale submitted a proposal to the US Securities and Exchange Commission (SEC) to add staking functionality to its Ethereum ETF. The decision on the introduction of staking is expected to be made before May 26th. If staking functionality is added to the Ethereum ETF, investors will be able to receive staking rewards in addition to profits from the price increase of ETH. While existing Ethereum ETFs have focused solely on price fluctuations, ETFs with added staking functionality can provide an additional annual return of 3-4%, significantly increasing their investment attractiveness. In particular, it is meaningful that institutional investors who have had difficulty directly holding or staking cryptocurrencies in a regulated environment will have an easy access route.

Jang, the head of the research center, said, "The Ethereum physical ETF approved last July has been showing net inflows since November of the same year," and "If staking functionality is added to the ETF, even greater capital inflows are expected."

Reporter Doyeri Do
yeri.do@sedaily.com