Citi Report: Ether’s Struggles Offset by Strong Fundamentals and Rising TVL

Ether (ETH) has seen a significant dip of over 20% so far this year, but its underlying fundamentals are showing signs of improvement, according to Citi’s latest research report, released Monday.

While ether has underperformed in the short term, with its price dropping over 20%, Citi’s analysts, led by Alex Saunders, emphasized that the fundamental outlook is not as bleak as it may seem. They pointed out that despite some volatility in user activity, the Ethereum network continues to see growth in key metrics like Total Value Locked (TVL).

The report noted that TVL on the Ethereum blockchain has seen a sharp increase, highlighting continued investment in Ethereum’s infrastructure. Additionally, ether exchange-traded funds (ETFs) continue to attract inflows, with $3.2 billion added since their launch in July, signaling sustained investor confidence.

Citi also pointed out that the performance of Ethereum has faced increasing competition from Layer 2 solutions and rival blockchains such as Solana, which have gained traction with stronger user growth. This has raised questions about Ethereum’s long-term competitive advantage in the space.

One noteworthy observation in the report is the influence of President Trump’s World Liberty Financial, which holds more than $200 million in ether. Citi sees this as a sign of increasing institutional interest and potential support for the U.S. crypto industry, especially amid ongoing discussions about regulatory clarity.

Furthermore, Citi highlighted that ether’s performance struggles have coincided with a rise in Bitcoin’s dominance, now reaching multi-year highs above 60%. The relative performance of Ethereum and altcoins could serve as an important gauge of market sentiment and optimism surrounding future U.S. regulatory developments in the crypto sector.