The no. 2 cryptocurrency, which commands less than a fifth of the $2.7 trillion crypto market, has not done poorly. But ether is up just around 53% in the first three months of this year, compared with bitcoin's 65%.

Bitcoin scaled new peaks last month. Trading around $3,612 on Monday, ether is at least 26% below its Nov. 2021 all-time high of $4,867.60.

Even a recent technical upgrade of the Ethereum blockchain, which is used to build applications, barely made a splash beyond the circle of crypto enthusiasts, in contrast to the excitement ahead of bitcoin's "halving" next month, a technical change designed to slow the coin's supply.

In a typical case of markets selling the fact, ether dropped 12% after the underlying blockchain's Dencun upgrade on March 13 aimed at lowering transaction fees on its ecosystem.

"Ethereum is persistently dogged by its lack of name recognition among non-endemic investors," said Joseph Edwards, head of research at London crypto firm Enigma Securities.

"There's a lot more economic activity on it compared to 2020... but it reaching all-time highs will likely come fairly late."

Much depends on whether the U.S. Securities and Exchange Commission (SEC) approves spot ether ETFs. For, it was the approval and launch of several U.S. spot bitcoin ETFs that spurred institutional demand and drove it to record highs.

Ether ETFs too are waiting, with VanEck's filing first in line for a decision on May 23.

Standard Chartered Bank expects U.S. ether ETFs to be approved on May 23, propelling it to $8,000 by end-2024 and $14,000 by end-2025.

COMMODITY OR SECURITY?

Not everyone is as optimistic about the U.S. regulator greenlighting a spot ether ETF.

Lawyers and industry sources have said ether's legal status is ambiguous and they expect regulators to move cautiously.

The SEC has said bitcoin is a commodity, but has not ruled on ether.

Unlike bitcoin, ether is traded on a so-called 'proof-of-stake' blockchain that allows users to earn yield in exchange for locking up tokens for a period of time.

And because ether is often 'staked', or deposited, it could be deemed a security, which will entail stricter rules around disclosure that fly in the face of cryptocurrency's ethos of bypassing the traditional gatekeepers of finance, such as banks and exchanges.

But that complicates the calculus for ETFs, as the yield on staked ether is often higher than that of just plain passive tokens.

"Getting the SEC on board to allow staked ether ETFs will be a very tough bargain and is, for now, extremely unlikely," said Anders Helset, head of research at digital assets analytics firm K33

Institutional demand for ether has been a fraction of that for rival bitcoin. Digital asset funds tracking ether have seen outflows of $46.4 million in the month to March 23, according to CoinShares data, versus inflows of over $4 billion for products tracking bitcoin.

Some market participants believe in focusing on ethereum technology, which forms the backbone of much of the internet's 'Web3' vision and powers applications involving crypto offshoots such as decentralised finance and blockchain gaming.

BlackRock (BLK.N) unveiled its first tokenized fund on the ethereum blockchain last month, sparking conversation around the platform's use in broader tokenisation of real world assets.

So far over $2 billion worth of commodities and government securities, among other traditional assets, have been tokenized on several networks, of which 80% are on the ethereum blockchain, according to Swiss cryptocurrency manager 21Shares.