The probability of Ethereum’s ether (ETH) reclaiming its $4,000 peak by the end of December is fading fast, with market participants assigning only a 10% likelihood to such a move, according to Amberdata.

While bitcoin (BTC) has surged 109% in 2024, smashing through $90,000 to reach new all-time highs, ETH has lagged considerably, rising just 36% and trading at $3,100 — still far below its 2021 record of $4,832. This divergence has cast doubt on ETH’s ability to keep pace with the broader crypto rally, even as enthusiasm builds for bitcoin.

Options market data from Deribit paints a sobering picture. The probability density function (PDF) derived from ether options shows a concentrated expectation around lower price levels, indicating traders are not betting on significant upside for ETH in the near term.

Amberdata’s Director of Derivatives, Greg Magadini, attributes the subdued sentiment to structural challenges within Ethereum’s ecosystem. “The deflationary narrative that once boosted ETH’s appeal has weakened,” Magadini noted. “Most DeFi transactions are now happening on layer-2 solutions, reducing activity on the main Ethereum chain and dampening the token’s utility and demand.”

At the recent Devon conference, Ethereum researcher Justin Drake introduced the Beam Chain proposal, aiming to drastically cut block times and potentially draw more activity back to Ethereum’s main layer. While the proposal has generated buzz, its practical implementation could take years, limiting its immediate impact on ether’s price performance.

Despite these challenges, ETH could still benefit from bitcoin’s strength. A continued rally in BTC might pull ETH higher, potentially pushing it past the $4,000 mark. However, such a move would likely reflect broader market momentum rather than Ethereum-specific catalysts, leaving ETH’s underperformance relative to BTC intact.

As the year winds down, ether faces an uphill battle to recapture investor interest. Whether through future upgrades, shifts in market dynamics, or changes in regulatory policy, ETH will need a strong narrative to reignite its status as a leader in the crypto space.