According to a report by CoinDesk, Citigroup stated in a research report on Monday that Ethereum (ETH) has underperformed since the beginning of the year, with a decline of over 20%. However, its fundamentals are improving as the total value locked (TVL) on the Ethereum blockchain has significantly increased.
The Citigroup report pointed out that the stronger user growth on Layer 2 networks and other blockchains such as Solana has raised questions about Ethereum’s competitive advantage. However, analysts mentioned several fundamental data changes, including a significant increase in TVL, continued inflows into Ethereum exchange-traded funds (ETFs), and an increase in search interest.
The report indicated that after the US presidential election in November, the flow of funds into Ethereum ETFs reversed, and the total net inflows have reached $3.2 billion since their launch in July last year.
Daily net capital inflows into Ethereum spot ETF from November 2024 to present (Source: SoSoValue)
The bank stated that World Liberty Financial, a cryptocurrency project supported by former US President Donald Trump, holds over $200 million worth of Ethereum, which can be seen as an “additional incentive to strengthen US support for the cryptocurrency industry.”
Citigroup also noted that Ethereum’s weakness aligns with the increasing dominance of Bitcoin (BTC), as Bitcoin’s market capitalization has reached a multi-year high of over 60%.
