The downfall started at Wrestlemania 28. Sheamus was supposed to be the face in the win, but the fans took it as one big middle finger, when WWE screwed the fan favorite in favor of the prototypical muscular brute, who pounds on his chest in an eighteen second squash. The fans booed the crap out of Sheamus for the majority of his run as WHC, and things didn't pick up until his match with Big Show at Hell In A Cell, but it was a case of too little, too late.
To make matters worse, WWE ruined his character with all the goofy folktale bullshit. The horrid corny jokes, unfunny tales about Sheamus' past (I vividly remember one about a green testicle in a promo with Christian), and his silly mannerisms. Sheamus is supposed to be a bad ass brawler, who shows no mercy, not some goofy lug with a terrible sense of humor. Also, for some odd reason, WWE stuck Sheamus in a nowhere feud with Damien Sandow and Cody Rhodes, and WWE killed Sheamus' momentum with the Rhodes/Sandow feud.
IF the WHC was still around as a singles title, Sheamus might have a chance to see some real spotlight, but I can't picture Sheamus as a contender in the WWE WHC picture anytime soon. There was a time (back in 2012), when I had a real urge to see Sheamus VS Lesnar, but that's out the window now. Sheamus's character has suffered one too many setbacks, and if the match happened, it wouldn't surprise me if WWE used Sheamus as a tune up guy for Lesnar (i.e. Big Show at the Rumble this year) on the road to Wrestlemania 31.
I'm a fan of Sheamus, and there's a slim chance for Sheamus returning to the main event scene and high profiled feuds. Sheamus needs more time and a consistent push to climb out of his hole, but Sheamus' current spot in no man's land and his age are two big problems.