Ethereum appears to be entering its golden hour. Analysts are predicting more gains for the world’s second-largest cryptocurrency.

According to the latest data, ETH has gained 65% over the past month. However, its bullish run has not been smooth. Ethereum spent months lagging behind Bitcoin before reclaiming its leadership role. Now it is back in the spotlight.

Gautam Chhugani, an analyst at Bernstein, attributes Ethereum’s previous underperformance to a combination of structural and market-specific factors.

While Bitcoin soared past $100,000, cementing its dominance in the cryptocurrency market, Ethereum trailed far behind. Over the past year, the ETH/BTC ratio has fallen by 45%. However, the tides are turning. Chhugani identifies three key drivers behind the recent shift in momentum favoring Ethereum.

The first reason behind ETH’s rally is what Chhugani calls a “broadening of the crypto narrative beyond Bitcoin.” Previously, Bitcoin’s growth was fueled by ETF inflows and its adoption as a corporate treasury asset. Now, investor interest is pivoting to other use cases. According to the analyst, payments built on stablecoins and the tokenization of traditional securities are rapidly gaining traction.

Ethereum is also benefiting from the expansion of Layer 2 networks backed by major institutions. “Coinbase runs a layer 2 chain called Base built on Ethereum, earning annual revenues of ~$85mn in 2024 in sequencer fees,” Chhugani notes. Ethereum is increasingly taking the lead among smart contract platforms.

The third factor is tactical. Chhugani estimates that over the past 12 to 18 months, crypto hedge funds have favored long positions in Bitcoin and Solana, while shorting Ethereum. However, with the narrative now shifting towards real-world adoption, these funds are moving back into ETH. Meanwhile, retail activity is ramping up, with much of it centered on Ethereum.