Blockchain network Ethereum is on track to achieve annualized profits of $1 billion, following its Q1 income of $365 million. This marks a 155% increase in quarterly revenue compared to the previous year. According to The DeFi Report analyst Michael Nadeau, Ethereum’s Q1 income for 2024 is almost 200% higher than the $123 million profit in Q4 2023. Additionally, the network’s fee revenue, generated from user transactions, reached $1.17 billion, a 155% increase from Q1 2023 and an 80% increase from the previous quarter.
Nadeau attributes the revenue growth to increased network activity, primarily driven by a surge in decentralized finance (DeFi) activity during the quarter. This surge in activity has resulted in average daily transactions on the Ethereum blockchain in 2024 surpassing last year’s figures and approaching the peak results from 2021.
In 2024, there have been over 1.15 million average daily transactions, slightly higher than the 1.05 million recorded last year and just below the 1.25 million recorded in 2021.
Although Ethereum was launched in 2015, it only became profitable in 2023, earning $623 million. However, its revenues that year were 75% lower than its peak revenues of $9.9 billion in 2021. Nadeau explains that this is mainly due to the transition to proof-of-stake consensus in September 2022, which resulted in a significant drop in token incentives paid to miners (now validators).
Nadeau also shares his market predictions for the future, stating that “crypto will outperform everything else.” He expects rising liquidity conditions in the next few years, as the United States has a substantial amount of debt that needs refinancing this year, and the market has already factored in three rate cuts from the Federal Reserve. He believes that U.S. spot Bitcoin exchange-traded funds, the Bitcoin halving scheduled for April 20, and the innovation cycle will serve as catalysts for a bullish setup in the coming years.
Nadeau believes that Bitcoin and Ether are correlated, with Bitcoin outperforming in the early stages of a bull market due to its recognition as the most prominent cryptocurrency. However, he states that in the later stages of the cycle, Ether and altcoins tend to outperform Bitcoin. He notes that altcoins have rallied significantly in the past two cycles, outperforming Bitcoin throughout the entire duration.
In conclusion, Nadeau predicts that this trend will continue, but only for altcoins that have a clear product market fit.