2025 Ethereum Outlook: Can It Break Through Historical Highs?

Original Title: "Why Ethereum maxis say ETH will be the 'comeback kid' of 2025"

Written by: Tom Mitchelhill

Translated by: Daisy, Mars Finance

Analysts and experts say that AI agents, a series of significant network upgrades, and improvements in the U.S. regulatory environment are reasons for Ethereum fans to be optimistic about 2025.

Ethereum supporters believe that AI agents, major network upgrades, increased institutional interest, and comprehensive regulatory reforms brought by the new U.S. President Donald Trump’s crypto-friendly government are all reasons to look forward to 2025.

Kain Warwick, founder of Infinex, stated in an interview with Cointelegraph that although Ethereum's performance in 2024 may be somewhat lackluster, this asset is like a "compressed spring" that is ready for a breakthrough in 2025.

According to TradingView data, as of now, ETH (Ether) has risen 53.5% this year, climbing from $2,350 on January 1 to the current $3,478.

ETH has posted a year-to-date gain of 53.5%. Source: TradingView

Meanwhile, other major crypto assets, including Solana, Cardano, and Ripple's XRP, have risen 92.7%, 57%, and 276.5% respectively this year.

"The longer you compress it, the harder it will bounce back. There are many favorable factors and some constraints, but once it breaks through, people will say 'Oh my God,'" Warwick said.

Source: Kain Warwick

He mentioned several Ethereum Improvement Proposals (EIPs) and the enhancements in user experience these upgrades would bring, believing these are key turning points for Ethereum and ETH price movements.

"In 2025, I think we will see improvements in account abstraction, significant progress in L2 interoperability, and a substantial enhancement in user experience between L2s."

Ethereum Will Welcome the Pectra Upgrade in 2025

One of the major upgrades that Warwick and other Ethereum supporters are eagerly anticipating is the Pectra upgrade—this is the next significant milestone on Ethereum's roadmap, expected to launch in early 2025.

Gaia Regis, co-founder and CEO of the restaking platform Byzantine, stated that the Pectra upgrade will fundamentally change how Ethereum's security layer operates.

"Currently, Ethereum staking mainly relies on liquidity. Essentially, many ETH holders want to participate in staking. This is usually a good thing because more nodes mean more decentralization and higher security," she said.

However, Regis noted that Ethereum has now reached a massive scale—communication among over a million Ethereum validators—which is starting to slow down the network.

"Pectra addresses this issue by increasing the maximum effective balance of validators from 32 ETH to 2,048 ETH, significantly reducing the number of validators required and alleviating the pressure on the network," Regis said.

"Less pressure means a faster network and a better experience for Ethereum users."

In September of this year, Ethereum core developers decided to split the Pectra upgrade into two main packages. The first Pectra package will introduce a total of eight EIPs, the most important of which is EIP-7702, aimed at improving the user experience of wallets and chain abstraction.

"This will make staking cheaper, leading to more people participating in staking, which will gradually lower staking rewards over time. For this reason, we are very optimistic about restaking. Many people will want to enhance their staking rewards by securing other networks."

Trump's Crypto-Friendly SEC Will Be Particularly Beneficial for ETH

Saul Rejwan, managing partner at crypto venture capital firm Masterkey, stated in an interview with Cointelegraph that Ethereum and more "legitimate" projects in the crypto industry, particularly decentralized finance (DeFi) and decentralized physical infrastructure (DePIN), will benefit the most under Trump's administration and a more crypto-friendly U.S. Securities and Exchange Commission (SEC).

On December 4, Trump nominated pro-crypto businessman and former SEC commissioner Paul Atkins to be the next SEC chair, while current chair Gary Gensler plans to resign on January 20.

"In a more favorable regulatory environment, DeFi projects on Ethereum will thrive, and areas like restaking only need a little regulatory push to attract institutional investors," he said.

"We expect this new leadership to lower barriers to entry, making it easier for early crypto entrepreneurs and resilient companies to innovate and succeed."

Stablecoins, Tokenization, and AI Agents

Matt Houghan, Chief Investment Officer at Bitwise, stated that Ethereum has three major advantages as it enters 2025 and expects this asset to experience a breakout in the new year.

"Ethereum is at the center of the three biggest trends in the crypto industry: the rise of stablecoins, tokenization, and AI agents. It dominates the market share in all three areas," Houghan said.

He added, "I believe the excitement in these three areas next year will impact Ethereum, making it the comeback king of 2025. You can already see this in the recent strong performance and ETF inflows."

In the past two weeks, Ethereum ETFs have seen net inflows of $1.5 billion, marking one of the largest inflow periods among eight spot funds, according to data from Farside Investors.

Ethereum ETFs have witnessed over $1.5 billion in net inflows in the last two trading weeks. Source: Farside Investors

Like Rejwan, Houghan also believes that the new crypto-friendly SEC under Trump will be particularly beneficial for Ethereum.

"I look forward to lifting the 'Sword of Damocles' that has been hanging over the U.S. crypto industry for the past four years. Washington's new approach will unleash millions of crypto entrepreneurs, many of whom will build killer applications on Ethereum and its layer two networks," Houghan said.

"We are entering the golden age of crypto, and Ethereum will be one of the major beneficiaries of this thriving landscape."

Houghan stated that overall, Bitwise expects ETH to break its previous all-time high of $4,878, reaching what he describes as a "conservative" new high of $7,000.

More Layer Two Networks, Restaking, and Better DApps

Edu Timmers, Chief Marketing Officer of crypto company Keyrock and an Ethereum supporter, believes that the launch of new layer two networks like Abstract and Deutsche Bank's project will enhance the widespread application of the Ethereum ecosystem.

Timmers also mentioned the rise of the on-chain perpetual contract protocol Hyperliquid, built on Arbitrum, which demonstrates the growing dominance of Ethereum on-chain, and he anticipates that Ethereum and its decentralized applications (DApps) ecosystem will begin to compete with centralized market leaders like Binance in the new year.

"Projects like Hyperliquid will start competing with centralized players like Binance in 2025, rather than decentralized projects like Uniswap," Timmers said.

Additionally, Timmers stated that Ethereum restaking is another undervalued area to watch in 2025, claiming it will make the network more robust and versatile.

"As chains begin to transfer security to the Ethereum mainnet through solutions like EigenLayer, restaking may see a breakthrough."