The Curious Case of Ethereum Growth Despite ETH Price Slump

Ethereum is having one heck of a year. ETH Price has tanked, investors are worried, but under the surface, the blockchain’s fundamentals are getting stronger. It’s a strange mix, and if you’re scratching your head trying to figure out what’s going on, you’re not alone.

Why ETH price is underperforming, why Ethereum’s Total Value Locked (TVL) is rising, and how Ethereum is facing off against rising competition like Solana. Let’s look at why Hong Kong’s new investment visa rules are a game-changer for crypto adoption and what all of this means for Ethereum’s future.

ETH Price Slump: What’s Going On?

Let’s not sugarcoat it—ETH price has been struggling in 2025. Year-to-date, Ethereum is down over 20%, hovering around $2,613 as of mid-February. Bitcoin, on the other hand, is soaring, with its dominance reaching a multi-year high of over 60%.

So why is ETH price slumping while BTC is flying high? Here are the key reasons:

• Ethereum Lacks a Strong Narrative: Unlike Bitcoin, which is cementing itself as “digital gold” and an inflation hedge, Ethereum doesn’t have a clear narrative right now.
• Layer-2 Solutions Are Siphoning Activity: Many users are migrating to Layer-2 networks instead of using Ethereum’s main chain, reducing transaction fees and validator revenue.
• Solana and Other Competitors Are Gaining Ground: Faster, cheaper blockchains like Solana are attracting users and applications that used to rely on Ethereum.

But here’s the twist—while ETH price is struggling, Ethereum’s fundamentals are telling a very different story.

Ethereum’s Total Value Locked (TVL) Is Climbing—And That’s a Big Deal

Despite the ETH price drop, the amount of capital locked in Ethereum-based decentralized finance (DeFi) protocols is rising sharply. This is a huge sign of strength because TVL represents real money being put to work on the Ethereum blockchain.

Why Is TVL Going Up?

• DeFi Activity Is Booming: Ethereum is still the king of DeFi, and users are locking up their assets in lending, staking, and trading protocols.
• Institutional Interest Is Growing: ETH-based exchange-traded funds (ETFs) have seen $3.2 billion in inflows since their launch in July 2024.
• Ethereum’s Upgrades Are Making It More Efficient: With upgrades like Dencun and the upcoming Pectra, Ethereum is becoming cheaper and more scalable.

Hong Kong’s Crypto-Friendly Investment Visa: A Massive Adoption Play

Hong Kong just made a ground-breaking move—they’re now allowing Bitcoin and Ethereum as proof of wealth for their New Capital Investment Entrant Scheme. This means wealthy crypto investors can use BTC and ETH to qualify for residency.

Here’s how it works:

1. You need a net worth of HK$30 million ($3.8 million USD).
2. You can prove that net worth with crypto, as long as it’s verified by a chartered accountant.
3. However, you can’t invest the funds in crypto after approval—they must go into traditional assets.

This is a huge step for crypto legitimacy. Over 750 applications have already been filed, showing strong interest from global investors.

Ethereum’s Competition Is Heating Up—Is Solana Winning?

Ethereum isn’t just fighting a ETH price dip—it’s fighting off competitors that are coming for its crown. The biggest threat? Solana.

How Solana Is Challenging Ethereum

• Faster Transactions: Solana can handle 65,000 transactions per second, compared to Ethereum’s 15-30.
• Cheaper Fees: Solana’s fees are a fraction of Ethereum’s.
• Memecoins and DeFi Are Booming on Solana: Activity on Solana is skyrocketing, thanks to the rise of memecoins and decentralized finance apps.

JPMorgan recently pointed out that Ethereum’s network growth is lagging behind Solana, and that’s making investors nervous.

Layer-2s: Ethereum’s Strength or a Hidden Weakness?

Ethereum has been rolling out Layer-2 scaling solutions like Arbitrum, Optimism, and Base to handle more transactions at lower fees. While this helps Ethereum scale, it also pulls activity away from the main chain.

One of the biggest concerns? Uniswap, Ethereum’s top decentralized exchange, is moving to Unichain. Since Uniswap is one of Ethereum’s largest gas consumers, this move could reduce Ethereum’s fee revenue significantly.

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Ethereum has a tricky balance to maintain here—it needs Layer-2s to scale, but it can’t afford to lose too much activity to them.

The Road Ahead: What’s Next for Ethereum?

Despite the challenges, Ethereum is still the backbone of DeFi, stablecoins, and tokenization. The blockchain’s ability to adapt will be key in determining whether it can maintain its dominance.

Here’s what to watch for in the coming months:

1. Ethereum’s April Upgrade (Pectra): Will it bring much-needed improvements?
2. Institutional Adoption: More ETF inflows could provide a bullish catalyst.
3. Competition from Solana & Other Layer-1s: Will Ethereum find a way to stay ahead?

FAQs

1. Why is ETH price down in 2025?

ETH price has dropped over 20% due to Bitcoin’s rising dominance, competition from Solana, and a shift to Layer-2 solutions.

2. What is Total Value Locked (TVL) in Ethereum?

TVL is the total amount of crypto locked in DeFi applications on Ethereum. It’s a key indicator of network health.

3. How is Hong Kong’s new visa rule affecting Ethereum?

Hong Kong now allows Ethereum as proof of wealth for investment visas, boosting ETH’s legitimacy.

4. Is Solana a real threat to Ethereum?

Yes. Solana’s speed, lower fees, and rising adoption are challenging Ethereum, especially in DeFi and memecoins.

5. What’s happening with Ethereum’s Layer-2 networks?

Layer-2s like Arbitrum and Optimism are reducing congestion, but they’re also pulling activity away from Ethereum’s main chain.

6. What’s next for ETH price in 2025?

Ethereum is preparing for its Pectra upgrade in April, which aims to improve efficiency and scalability.

7. Should I invest in Ethereum right now?

ETH price remains a strong long-term bet, but short-term volatility is high due to competition and macroeconomic factors.

Glossary of Key Crypto Terms

• Layer-2 Solution: A network built on top of Ethereum to improve speed and reduce fees.
• TVL (Total Value Locked): The total capital locked in Ethereum-based DeFi protocols.
• DeFi (Decentralized Finance): Financial applications running on blockchain without intermediaries.
• Bitcoin Dominance: The percentage of the total crypto market cap that belongs to Bitcoin.
• Pectra Upgrade: Ethereum’s upcoming upgrade focused on improving network efficiency.

References:

Coin Desk – Coindesk.com

Coin Desk – Coindesk.com

Tron Weekly – Tronweekly.com