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 increased significantly.
The Citigroup report pointed out that the stronger user growth on Layer 2 networks and other blockchains like Solana has raised doubts about Ethereum’s competitive advantage. However, analysts mentioned some fundamental data changes, including a significant increase in TVL, continued inflows into Ethereum exchange-traded funds (ETFs), and rising search popularity.
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.
The bank stated that the cryptocurrency project World Liberty Financial, supported by former US President Donald Trump, holds over $200 million worth of Ethereum, which can be seen as an “additional motivation to ensure stronger US support for the crypto industry.”
Citigroup also pointed out that Ethereum’s weakness aligns with the rising dominance of Bitcoin (BTC), as Bitcoin’s market share has reached a multi-year high of over 60%.