Should You Buy Ethereum While It's Down 47% This Year?

Let's be perfectly clear: Ethereum (CRYPTO: ETH) is having a very bad year. It's now down 47% in 2025, making it the worst-performing top cryptocurrency. At a time when rival cryptocurrencies are finally starting to regain momentum, Ethereum is down another 10% over the past 30 days.

So is it time to give up on Ethereum? Or is there still hope that it can somehow turn things around? Let's take a closer look.

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Ethereum's competitors

Of foremost concern, Ethereum no longer looks as formidable as it did even 12 months ago. Upstart rivals continue to proliferate, and there are now four direct competitors -- Solana (CRYPTO: SOL), Cardano (CRYPTO: ADA), Avalanche (CRYPTO: AVAX), and Sui (CRYPTO: SUI) -- that are taking market share away from Ethereum.

All five of these competitors boast market caps of $9 billion or higher, all of them now rank among the top 20 cryptocurrencies in the world, and all of them are performing better than Ethereum this year. Moreover, if you look outside the Top 20, there are plenty more smaller competitors, many of them focusing on a specialized niche of the blockchain world that Ethereum once had the potential to dominate.

Ethereum's existential crisis

So this rapidly changing competitive landscape is one obvious reason why Ethereum's crypto price continues to tank. It's no longer enough for Ethereum to roll out a new blockchain upgrade every year and expect investors to be impressed.

Moreover, Ethereum appears to be experiencing an existential crisis right now. At the beginning of the year, there were even signs that Vitalik Buterin, the legendary co-founder of Ethereum, might actually quit and hand over the reins to someone new.

Image source: Getty Images.

At the same time, developers within the Ethereum blockchain ecosystem are squabbling over its future direction. And there has already been a big leadership shakeup this year at the Ethereum Foundation, the nonprofit organization responsible for guiding the future direction of Ethereum.

Adding insult to injury, some blockchain competitors are now raising the question of whether Ethereum will even exist a decade from now. Charles Hoskinson, one of the co-founders of Ethereum who went on to launch rival Cardano, recently suggested that Ethereum is running out of time and is in imminent danger of becoming the next MySpace or BlackBerry.

There's too much competition, Hoskinson says, and Ethereum is at real risk of losing its foothold in decentralized finance (DeFi), the one area where it has been historically dominant. Moreover, economic value is rapidly flowing away from Ethereum (the Layer 1 blockchain) to new blockchain scaling solutions (the Layer 2 blockchains) that are designed to help Ethereum run faster and more efficiently. Investors are waking up to this reality and significantly marking down their price forecasts for Ethereum.

The Trump factor

All of this, of course, is the reason for doom and gloom about Ethereum. However, there is one silver lining: the Trump White House still thinks Ethereum is core to the growth of the blockchain and crypto sector and is devoting considerable resources to propping it up. For example, it made Ethereum a centerpiece of the new U.S. Digital Asset Stockpile, and World Liberty Financial, the crypto company affiliated with the Trump family, has been buying Ethereum for its own portfolio.

It's up to you to decide, of course, whether these efforts are going to help. For example, take the U.S. Digital Asset Stockpile. Yes, it commits the U.S. Treasury to consolidate the government's holdings of Ethereum. But it does not commit the U.S. Treasury to buy new Ethereum, which is what investors were hoping for. Any large-scale buying of Ethereum by the U.S. government, of course, could send its price soaring.

Only buy Ethereum if this one thing happens

At the end of the day, it's almost impossible to recommend Ethereum these days. And that's really a shame because Ethereum has been a star performer for nearly a decade. It remains the second-largest cryptocurrency in the world and is one of the few cryptocurrencies widely held by both large institutional investors and small retail investors.

But here's the thing: Digital assets need to be valued based on their future growth projections and not on past accolades or past performance. There are simply too many competitors these days, and Ethereum is starting to lag its biggest rivals. Unless the Trump White House commits to a full-scale buying of Ethereum as a national strategic asset, there are better investment targets elsewhere.

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Dominic Basulto has positions in Cardano, Ethereum, Solana, and Sui. The Motley Fool has positions in and recommends Avalanche, Cardano, Ethereum, Solana, and Sui. The Motley Fool has a disclosure policy.