If you’re an Ethereum (CRYPTO: ETH) investor, the good news is that the world’s second-largest cryptocurrency is up an impressive 50% for the year. Ethereum recently broke through the $4,000 price level and, even with a recent pullback, is within striking distance of regaining its all-time high of $4,891 from November 2021.

The bad news, however, is that Ethereum continues to underperform against other cryptocurrencies. Bitcoin (CRYPTO: BTC), for example, is up 131% for the year. And many other top cryptocurrencies are also posting triple-digit returns. All of which leads to the obvious question: Should you be buying Ethereum as we head into 2025?

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Mixed reviews for the spot Ethereum ETFs

The one catalyst that was supposed to send Ethereum higher this year was the launch of new exchange-traded funds (ETFs). After the spectacular launch of the spot Bitcoin ETFs in January, investors had high hopes for the spot Ethereum ETFs in July.

Unfortunately, while the spot Bitcoin ETFs still garner rave reviews, the reviews have been mixed for the spot Ethereum ETFs. On launch date, some investors were expecting $1 billion per month to flow into these ETFs. Five months later, the largest spot Ethereum ETF, the iShares Ethereum Trust (NASDAQ: ETHA), still has just $3.5 billion in assets under management. By way of comparison, the iShares Bitcoin Trust (NASDAQ: IBIT) has over $53.5 billion in assets under management.

Ethereum / US Dollar chart by TradingView

Moreover, although Ethereum is up 50% for the year, its performance has been lackluster since the debut of the spot Ethereum ETFs. Since July 23, when the new investment products launched, Ethereum is actually down 1%. That’s particularly disappointing given that this time period includes a post-election rally that saw Ethereum briefly soar past the $4,000 mark.

New competitors on the horizon for Ethereum

The lackluster performance of the new ETFs is not the only reason for concern. Steadily but surely, new competitor blockchains are taking away market share from Ethereum, in areas ranging from decentralized finance (DeFi) to blockchain gaming.

One reason for this is that the new competitor blockchains are simply faster, cheaper, and easier to use than Ethereum. And this disparity is much wider than many people assume. For example, Ethereum can only process 15 transactions per second. Solana (CRYPTO: SOL) can process 65,000 transactions per second. And Sui can process 297,000 transactions per second.

For good reason, investors are starting to take notice. Ethereum is up 50% for the year, but Cardano is up 60%. Solana is up 88%. And Sui is up an astounding 505%. Moreover, nearly all of the Layer-2 scaling solutions that sit on top of the core Ethereum blockchain (in order to help it process transactions faster) are also underperforming. Three of the top Layer-2 scaling solutions — Arbitrum, Optimism, and Polygon — are down 50% or more for the year.

Image source: Getty Images.

Putting it all together, I think Ethereum’s first-mover advantage is close to disappearing in the blockchain world. Yes, when Ethereum launched back in 2015, it stood alone as the only smart contract blockchain platform. That is what made it so unique, and what fueled its stratospheric returns. But heading into 2025, it’s now been a decade that Ethereum has been on top, and rivals have had time to catch up.

What is the best Ethereum alternative?

Of course, there are some reasons to be optimistic about Ethereum. It’s led by one of the brightest minds in the entire crypto industry, Vitalik Buterin. It has a world-class developer network that helped to pull off The Merge (a blockchain transformation project) back in 2022. It has a long track record of rewarding investors with head-spinning returns. And it remains a key player in just about every blockchain niche.

However, I’m still not convinced that makes it a buy heading into 2025. If you’re looking for considerably more upside potential, you might consider investing in one of the up-and-comer challengers to Ethereum, such as Solana. If that sounds too risky or speculative, then there’s always Bitcoin, which continues to churn out triple-digit returns in a predictable four-year cycle.

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Dominic Basulto has positions in Bitcoin, Ethereum, Polygon, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Polygon, and Solana. The Motley Fool has a disclosure policy.