Is Ethereum ETH a Dead Altcoin? Sui & Solana Taking Over?

Ethereum is having a tough time. There’s no denying it. It’s not only crypto Twitter (now X) that’s giving Ethereum a hard time. More importantly, on chain data give proof that things are not going that well. The $ETH-$BTC chart doesn’t look good. $ETH is not holding up well, or, at all.

In December last year, the $ETH price was still above $4k. Now it’s $1,600. $ETH ETF outflows also keep going on. Network activity is down by 33%. On the other hand, competitors keep gaining ground. Users and funds are migrating to other L1s. So, what’s the story here, Ethereum? Time to take a closer look, to see if it’s dying or rebuilding.

What’s Happening at Ethereum?

There are many things happening at Ethereum. However, they are not all that positive. It still has the first mover advantage, but that is also crumbling. On-chain data show a negative trend for almost every important metric for the chain. Let’s take a look at some of these data in more detail.

Developer Activity Is Dwindling

Miles Deutscher points out that developer activity in crypto has dwindled. Currently, it’s hitting the same lows as in 2018. He mentions various factors for this. For example, AI is more interesting, so devs move there. However, this seems to hit Ethereum harder than other chains.

Source: X

$ETH OGs Are Leaving

$ETH OGs are selling their bags. Lookonchain gives various examples on X.

• One dumped 10,702 $ETH($16.86M) at $1,576. He was dormant for two years and bought this bag in 2016 at $8 per $ETH.
• Another one sold 7,974 $ETH($11.8M) at $1,479. He was dormant for 3 years. However, he still holds 30,606 $ETH ($45.7M).
• This one bought 5,001 $ETH (cost $1.38M) at $277 in 2017. He sold them all, starting a month ago, making a total profit of $8.66M. At $ETH ATH, this would have been $23 million.

In general, according to Glassnode, 74% of $ETH holders are underwater.

Funds Migrations to L2s and Other L1s

Other users are not selling their $ETH, however, they migrate to other L1s. The most popular L1s are Solana, Sui, and Hyperliquid. We see monthly net outflows of around $2.5 billion. These also include L2s. For example, Base and Arbitrum.

Source: Artemis

$ETH ETFs

This also brings us to the $ETH ETFs. These have been negative for weeks now. The reason is simple. Running an Ethereum validator is complicated and expensive. The rewards are between 3% and 4%. On the other hand, institutions prefer Treasury bonds. These earn over 4%.

How Do L2s Fare?

How are the Layer 2’s working out? First for Ethereum, but also for themselves? Ethereum saw the Layer 2s as a solution to help it with scaling. L2s also offered lower transaction fees. However, in the process, activity on the Ethereum seems to be dying. Most activity happens on a handful of L2s and on competitive L1 chains.

So, what started out as a good solution, seems to be backfiring now. Ethereum fees have dropped, true. Transaction fees on Ethereum are now in general below a Dollar. For Ethereum, not bad. However, the competing L1s offer transaction fees at a fraction of a cent. The transaction fees on L2s are similarly low as on competing L1s. So, why would you want to use this chain at all? See the picture below.

Source: Grow the Pie

Ethereum also still has its scalability issues. TPS is still around 14. Solana and Sui have daily TPS of around 4,000. Their theoretical TPS is much higher. That’s more like 65,000 for Solana and 300,000 for Sui.

The L2s themselves didn’t do that great, though. Many launched in 2024. Some had juicy airdrops. If you sold those airdrops, you did well. Holding the bags was not a good idea. Last year, these tokens all closed in the red.

• Mode (MODE): -26%;
• Starknet (STRK): -72%;
• zkSync (ZK): -7%;
• Blast (BLAST): -65%;
• Scroll (SCR): -12%.

Even Arbitrum (-44%) and Optimism (-41%) had a tough time last year. These are two top performing L2s. 

Source: Oak Research

Now, if we look at revenue, most struggle to get $1 million profit in a year. Others even run at a loss. So, the situation for L2s is also bleak. The number of users remains the same, but there’s too much diversification going on.

What Are Ethereum and Buterin Doing?

With all the things going on that I’ve mentioned, you expect Ethereum and Buterin to act. Right? Well, not that much, to be honest. Buterin came up with a simplified L1 privacy roadmap. He emphasized four key areas,

• Onchain payment privacy
• Activity anonymization
• RPC call privacy
• And network anonymization
  

Not exactly something that looks fit to close the burning fires. I’m not saying these are bad ideas, no, not at all. Privacy is important. However, privacy is not a major narrative during this bull run. All privacy projects tanked. To my surprise, I have to add. But that’s the current reality.

In the latest development, though, Buterin proposed to replace its EVM with RISC-V. Polkadot already uses this. RISC-V should make Ethereum faster and more scalable. It offers,

• Faster execution
• Simpler architecture
• 100x+ better for zk-proving
• Native Rust support
• Built to scale modular ecosystems

Can this be the key to bring back life into Ethereum?

World Liberty Financial

World Liberty Financial, linked to President Trump, bought a lot of $ETH. Their portfolio is down badly, exceeding losses of $145 million. 

Remember Eric Trump, with his X post when $ETH was at $2,900? Did you ever thank him for your losses? Oh wait, he quietly removed that part.

So, whatever Ethereum or Buterin are doing, seems to be too little and too late. Even support from the President of the USA doesn’t seem to help.

However, there’s still a lot of optimism for Ethereum. Many pundits expect a comeback when the market starts to rally again. However, will we ever see $4k again?

So, here are the two options. If you don’t see a recovery for $ETH, it’s best to sell now and buy $SOL or $SUI instead. 

However, if you think that $ETH will recover and even can make a comeback, what will be your best option? Only hold $ETH, or will you be better off holding Lido or Pendle, or something similar?

What do you think? How does the future for Ethereum look like? Let me know in the comments. Also make sure to join our Discord and X discussions.

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