Ethereum’s Road to Recovery: Signs of a Comeback in 2025

Ethereum has had a difficult start in 2025, down 20% by May. Yet, signs of a comeback are emerging with significant ETF inflows, a new upgrade called “Pectra” aimed at increasing efficiency, and a shift in strategic focus from co-founder Vitalik Buterin. Although underperforming, Ethereum has the potential to rebound in the latter half of 2025, possibly even surpassing Bitcoin in growth.

Ethereum (ETH), the second-largest cryptocurrency by market cap, isn’t exactly having the best start to 2025. Down nearly 20% by mid-May, it has consistently trailed behind the broader crypto market. Nonetheless, several factors are aligning that could lead to a significant rebound for Ethereum in the latter half of the year. Here’s what investors should keep an eye on.

One of the most telling indicators of a cryptocurrency’s momentum is the activity in its exchange-traded funds (ETFs), and luckily for Ethereum, it happens to have two of them based on its spot price. When there’s a surge in money flowing into these ETFs, it suggests rising demand, often pushing the price up. Conversely, outflows signal a potential decline. The troubling trend of the first half of the year saw a lot of money leaving these ETFs, but fortunes could be changing. In fact, May is shaping up to be a much brighter month, with over $100 million in inflows into Ethereum’s spot ETFs. While it might be too early to celebrate, the trend is encouraging.

Another factor driving potential growth is a recent upgrade to the Ethereum blockchain known as “Pectra.” This relatively recent upgrade, which went live on May 7, sparked a noticeable increase in Ethereum’s price. Blockchain upgrades are common, but Pectra has had a significant impact because it aims to ramp up transaction processing capacity, an area where competitors have made strides. The upgrade isn’t just about speed; it also simplifies transactions, making Ethereum less expensive and more user-friendly.

Moreover, Ethereum’s co-founder Vitalik Buterin is steering the project towards a new strategic vision. Before Pectra’s rollout, he discussed making Ethereum as straightforward as Bitcoin in the next five years. Post-Merge complexities have made Ethereum more challenging for users, leading to a reliance on Layer 2 solutions for better performance. But it seems the Ethereum community, under Buterin’s guidance, is acknowledging this issue, signalling a more streamlined approach that could appeal to new users.

However, for Ethereum’s comeback to materialise, it needs to secure a stronger foothold in the political landscape, particularly with the White House’s emerging views on cryptocurrency. Some signs are promising—Ethereum has become a key asset for World Liberty Financial, a crypto venture associated with Donald Trump, and was notably included in the U.S. Digital Asset Stockpile in March. Yet, Buterin’s absence at the Crypto Summit in Washington led to some eyebrow-raising. His critical views on the politicisation of crypto might mean Ethereum is hesitant to fully align itself with some of the White House’s more aggressive strategy, a factor that could impede growth and competitiveness against rival blockchains.

Looking at the broader picture, Ethereum’s performance this year has been underwhelming. It lost traction in key areas of the crypto market, failing to attract much of the retail investor buzz surrounding meme coins and lagging in fully engaging with the White House’s pro-crypto initiatives. But as we head into the second half of 2025, there’s a tangible shift on the horizon. There’s a real possibility that Ethereum could outpace Bitcoin in the coming months and emerge as a noteworthy success story in the crypto space, making up for its lacklustre start.