Summary The Grayscale Ethereum Mini Trust is poised to outperform the S&P 500 in 2025, driven by positive expectations for the Ethereum and Bitcoin markets. Ethereum's Pectra upgrade is likely to act as a strong positive catalyst in 2025 to improve the platform and increase the price. The Grayscale Ethereum Mini Trust should attract investors since it has the lowest fee among the Ethereum ETFs. The Grayscale Ethereum Mini Trust ( ETH ) has a good chance to significantly outperform the S&P 500 ( SPY ) in 2025. The Grayscale Ethereum Mini Trust is designed to reflect the value of the cryptocurrency, Ether, which is the native digital coin on the Ethereum Platform. I expect Ethereum to perform well as it follows the positive expectations of the Bitcoin ( BTC-USD ) bull market in 2025. Crypto experts expect Bitcoin to perform well in 2025 with price projections between $150,000 and $200,000. Ethereum is estimated to be priced at about $7,925 by December 2025 according a group of analysts . Overall, I think that many investors will be attracted to the Grayscale Ethereum Mini Trust because it has the lowest fees as compared to the other Ethereum ETFs. ETH is waiving its fee for the first 6 months since the ETF began trading on July 23, 2024 or until the total assets under management reach $2 billion. The fee will be 0.15% after either criteria is met. So, the fee will be implemented around January 23, 2025 at the latest. The Ethereum ETF with the next lowest fee is the Franklin Ethereum Trust ( EZET ) with a fee of 0.19%. Ethereum's Background Ethereum was built to enable others to write smart contracts and decentralized applications. The benefit of smart contracts are for fast and secure transactions. Smart contracts can save money by eliminating the need for middlemen such as lawyers or brokers. The smart contracts are basically scripts that automate actions between two parties. Ethereum provides a blockchain for others to write these smart contracts. Anyone can create their own rules and build smart contracts on the Ethereum blockchain. One example of a smart contract is between a supplier and a retailer where shipments and payments could be set-up. The code of the contract could be written to say if a delivery was made on time from the supplier, then automatically pay the full amount for the goods. If the delivery was made one day late, then the smart contract could automatically pay only 99% of the full amount for the goods. One percent could be deducted for each day that the delivery is late as a part of the contract. There are many applications where smart contracts can be useful. Another area is real estate where smart contracts can be set up for property transactions. For example, a smart contract could be set up so that a sale of a property is executed when certain conditions are met such as payment confirmation. Automated rental agreements and payments could also be set-up. Property titles could be transferred securely on the blockchain. Escrow services could be implemented to hold and transfer funds when necessary. Smart contracts can also be used in healthcare to secure patient data and to automate the management of trial protocols. They can be used in elections by speeding up the tallying and reporting of votes. They can be used for legal contracts. They can be used in insurance to streamline policy management/the claims process and to automate underwriting and fraud protection. Smart contracts can be used in gaming for engagement and to give rewards. These are just some examples among many for smart contracts. Demand Drivers for Ethereum Institutional investment is a large demand driver for Ethereum. Although, Ethereum's ETFs were launched in July this year, the price of Ether and the ETFs underperformed Bitcoin and its related ETFs. However, this may change in 2025. Bitcoin is thought of as digital gold, so it is probable that Ethereum as the next largest crypto is thought of as digital silver. Bitcoin moved further into acceptance as an alternative investment due to its first mover advantage, long-term performance, and with the issuance of its ETFs. So, I think that investors will also be warming up to Ethereum to further diversify their crypto portfolios. The existence of ETFs like the Grayscale Ethereum Mini Trust make investing in crypto easier to do and understand since they can be traded like stocks in standard brokerage accounts. The ETF's are likely to bring more awareness to Ethereum so that investors are likely to seek more knowledge about it as an alternative investment. Ethereum's Growing Open Interest (theblock.co) The chart above shows Ethereum's increasing open interest. Ethereum's open interest shows the number of open positions. Since the open interest has been increasing, this shows that money is flowing into Ethereum. November and December show a significant increase in the open interest. This looks bullish as the price of Ethereum increased from the low $2,000s to above $3,000 in November and December. This could be the start of a longer-term trend of higher demand for Ethereum. The Ethereum Pectra Upgrade Pectra is the name of Ethereum's next big upgrade which has an expected implementation in Q1 2025. The Pectra update is a series of proposals designed to enhance the network's functionality, scalability, and user experience. I won't explain the details of the technical changes , but I'll give you the gist of the expected benefits of the upgrade. Supply validator deposits will take only 13 to 19 minutes as compared to the current time of 12 hours. This time is a waiting period after deposits are fully processed. Withdrawals and exits are also streamlined and more convenient as part of the upgrade. Another improvement is to have a balance of validators and participants in the protocol. This will allow stakers to stake in more flexible increments. Decreasing disk requirements by changing how data is stored can help to increase the gas limit. This can lead to lower transaction fees, decreased network congestion, and quicker transaction processing times. Other changes are expected to make Ethereum more decentralized and censorship-resistant. The improvements as part of the Pectra upgrade can make Ethereum more attractive for developers and users. This might increase demand for Ethereum among investors. The Potential For Pro-Crypto Policies President elect, Donald Trump stated that he wants to make the United States the crypto capital of the world . This might involve providing incentives to invest in cryptocurrencies. It may also involve creating incentives for crypto miners to operate in the United States. Another idea from Senator Cynthia Lummis is to create a U.S. national strategic Bitcoin reserve . If a Bitcoin reserve is created and approved, it could drive Bitcoin, Ethereum, and other cryptocurrencies significantly higher. When Bitcoin moves higher, it tends to drive other cryptos such as Ethereum higher. Ethereum's Technical Perspective Ethereum (ETH-USD) Price Chart with RSI and MACD (TradingView) Ethereum's monthly price chart above has been similar to Bitcoin's in the past two cycles. However, Ethereum has been lagging Bitcoin in the current cycle. Bitcoin exceeded its previous all-time high from 2021, while Ethereum didn't yet rise to its all-time high from 2021. The peak of each cycle tends to occur approximately when the RSI (purple line in the middle of the chart) increases above 90. The last cycle had a double top in price. So, the peak in 2021 actually occurred at the second top when a bearish divergence formed. This is marked by the price rising from the 2021 1st top to the 2nd top, while the RSI decreased during the same time. This formation typically results in a long-term sell-off, which did occur in 2022. While Bitcoin did exceed its previous all-time high, the price has pulled back below $100,000. Bitcoin's RSI also tends to increase above 90 near the peak of each cycle on its monthly chart. However, Bitcoin's RSI only hit about 77 and is currently at about 73 after the recent pullback. So, if the price follows previous cycles, we could see the price rise further in 2025 as the RSI increases to above 90. This would likely drive Ethereum higher as it typically follows Bitcoin during the last year of the cycle. The Risks For Ethereum There is no guarantee that Ethereum's price will follow similar patterns to previous cycles. Ethereum could continue to lag Bitcoin's performance. There is also no guarantee that Bitcoin rises to the price targets in 2025 that many are providing. The range for Bitcoin's 2025 price target is between $150,000 to $400,000 . If Bitcoin fails to rally in 2025, it would likely lead to a failure of Ethereum to rally. Another risk for Ethereum is competition. Some primary competitors for Ethereum include: Cardano ( ADA-USD ), Solana ( SOL-USD ), Polygon ( MATIC-USD ), and Avalanche ( AVAX-USD ). These competitors are also designed to enable smart contracts. Cardano is considered to be more energy efficient than Ethereum. Solana and Polygon are faster with lower fees than Ethereum. Avalanche can scale more effectively than Ethereum. The plus side for Ethereum is that it remains the top smart-contract platform because of its large developer community and user base. Therefore, Ethereum will likely have to improve through upgrades to be faster, less expensive, and with a better ability to scale. Otherwise, the competition could outperform Ethereum, which could lead to a lagging price for Ether and the Grayscale Ethereum Mini Trust. Long-Term Outlook for the Grayscale Ethereum Mini Trust Ethereum has the potential to outperform the S&P 500 in 2025. If Ethereum hits its analysts' projected price of $7,925 in 2025, it would be a 136% gain over the current price of $3,352. The S&P 500 is expected to rise by 10% according to a collection of analysts . If such a significant rise in Ethereum does occur in 2025, it is likely to drive the Grayscale Ethereum Mini Trust significantly higher. Ethereum's Pectra Upgrade should make Ethereum more competitive from a developer and user perspective. This could act as a positive catalyst to drive the price of Ethereum higher in 2025 to the expected target price. Bitcoin's expected increased adoption as digital gold in 2025 can also act as a positive driver of Ethereum's price.
