With a current market cap of around $360 billion at the moment of writing, Ethereum stands out as the second largest and most popular cryptocurrency after Bitcoin. In the last five years only, the underlying blockchain’s innate token has succeeded in shooting over 1,700% in value, which would turn an early investment of $1K into a mind-blowing $18K currently.
Ethereum is still 36% off its ATH, but the crypto landscape brings good fortune. The asset recorded astonishing financial performance spanning the first months of the year, with an annual profit estimated to breach the $1BN mark. Similarly, the realistic Ethereum price prediction of these days positions it at the selling price of $4,000 in the foreseeable future, all the more since the halving is complete and history has demonstrated that Bitcoin mining reward cuts benefit ETH to unexpectedly large extents.
Ethereum has been on a great run since 2023’s start, leveraging the larger cryptocurrency market rally and continuously proving its worth. A massive part of the revenue spikes registered is attributed to the strides in the decentralized finance (DeFi) sector, the niche’s rising mainstreamness, and Ethereum’s strengthened network activity. Before you jump on buying the dip, let’s discover some essential things you need to keep in mind throughout your crypto journey in times of booming DeFi prominence.
Ethereum’s Q1 income tripled
Since Ethereum’s debut in 2015, the ledger didn’t earn much money until 2023, when its sudden expansion cumulated to a bottom line of a jaw-dropping $623MN. Around that time, a broader audience could cross their hearts that the blockchain is never dying. Still, the prices didn’t reflect such an optimistic scenario, as prices tended to remain modest.
One of the latest studies released by bigwig blockchain analysis provider Chainalysis estimates the total number of gains crypto investors achieved at $37.6BN in 2023. And spanning the four months of the year, an April report by famous analyst at The DeFi Report, Michael Nadeau, states that Ethereum’s income in the first quarter of the year breached the explosive figure of $365MN. The achievement represents a 155% Y-O-Y quarterly profit increase, as well as a noteworthy growth of 200% when contrasted to the revenue registered in the final quarter of last year.
Similarly, the remarkable performance marks an 80% upturn from the third quarter of 2023. All of these upswings are, in part, occurring due to the user transactions’ fees. Michael Nadeau emphasized critical acumen from Ethereum’s past performance, expressing an activity in smart contract-based ETH that’s higher than ever before.
Despite the current heightened price volatility, the blockchain’s usual trades have exceeded last year’s numbers, getting closer to the pinnacle recorded in 2021. As 2024 records show, Ethereum keeps proving its demand and utility, boasting over 1.15MN average transactions per day.
DeFi expansion drives more profits
The growth in DeFi activity concluded with massive revenue growth in Ethereum. With the expansion of the numerous applications built atop the Ethereum blockchain, the network witnessed an unparalleled profit boost resulting from transaction fees.
Ethereum’s fee income jumped to $1.17BN in the first quarter of this year alone, recording a 155% upturn compared to 2023. Furthermore, this spike represents an 80% boost from the last quarter of 2024.
Ever since its launch, Ethereum has registered a constant user base and revenue stream growth. Blockchain resilience is more than obvious, especially during impeccably transitioned periods like the colossal switch from the proof-of-work consensus model to the proof-of-stake system.
The network’s annual income has progressively risen, leading to profits worth $623MN, up from $623MN last year. This ascending path emphasizes the longevity and sturdiness of the blockchain and the native coin.
Deflation and token economics
Nadeau underscored valuable insights handpicked from the Ethereum Investment Framework, showing that Ethereum’s accumulations held in smart contracts breached records. Moreover, the average daily issuance registered on the network in the first quarter of the year stood at 2,498 ETH – a figure counterbalanced by the daily 3,665 ETH burned, leading to a -.09% deflation for Q1 and an annualized performance of -.38%.
These annotations and the continuous innovation trend within the cryptocurrency realm pave the path for ongoing adoption and growth. According to Michael Nadeau, rising Bitcoin ETF activity is a door opener for enhanced mainstream interest in digital currency, while the last reward reduction historically heralds bull runs. Moreover, the analyst underscores a connection between Ethereum and Bitcoin, suggesting that the former has a habit of outperforming in later stages, similarly to other altcoins. At the same time, the initial phases after the halving’s completion have Bitcoin as the main star. This tendency is attributed to the new waves of retail interest witnessed and the ease with which the market covers investors’ demands, among others.
Standout points in Ethereum
Ethereum has several strong points that may never send the blockchain in the dark. Its essential attribute is that it enables smart contracts or computer-ran programs that instantly activate when the participants involved in a transaction meet already established criteria. You can associate the process with an escrow fund that’s sent the requesters’ way the moment they fulfill the set conditions to receive the money. This characteristic is what helped Ethereum steal the light from Bitcoin. Not to add that this blockchain is frequently designated the “world’s decentralized computer.”
Unlike Bitcoin, Ethereum has long slashed its energy consumption by a jaw-dropping 99%. Estimates suggest that the former’s network energy consumption balances the energy wasted by a small nation. Moreover, Ethereum’s likelihood of entering the ranks of the cheapest and fastest networks is high. It currently processes 12 to 15 transactions per second (TPS), but Bitcoin is well beyond this number, roughly 6-8 TPS.
Words of caution
Despite the optimistic outlook of Ethereum and the broader crypto market, it’s important to remember that each investor has their own goals, circumstances, possibilities, and risk tolerance. Regardless of what the headlines may inspire, you’re advised to DYOD before any investment, irrespective of its substantiality. From now on, you’re good to explore a market abounding in boundless opportunities!
