Brief description
Crypto analysts have expressed concerns that Ethereum could drop to $2,500 due to weak fundamentals.
Ethereum is currently facing a drop in network activity, which has pushed its average transaction fees to an all-time low.
The Ethereum ETF’s chance of approval jumped to 14% after the applicant made changes to the proposal.
The cryptocurrency market has seen a recent downturn, marked by significant price drops for major assets such as Ethereum and Bitcoin.
Ethereum (ETH), in particular, appears to be struggling with a clear bearish trend, leading many crypto analysts to predict further declines for the second-largest cryptocurrency by market cap.
Ethereum could drop to $2,500
According to a recent investor advisory from cryptocurrency research firm 10X Research, Ethereum’s potential drop to $2,500 is a concern due to weak fundamentals. They noted that Ethereum’s performance in the current market cycle has been inconsistent, which runs counter to its role as a catalyst for bullish cycles in previous cycles.
The firm highlighted Ethereum’s influence on Bitcoin’s growth during this cycle, highlighting the strong correlation between the two, with an R-squared of 95%. Ethereum’s declining fundamentals are seen as an obstacle to widespread fiat inflows into the crypto ecosystem, thereby hindering Bitcoin’s rise.
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“Ethereum: The world’s second largest coin continues to disappoint from both a fundamental and technical perspective. The daily chart below looks particularly weak in my opinion. If 2950 breaks we would easily see a breakdown of the 2500-2600 range,” said Daniel Yan, founder and CIO of Kryptanium Capital.
Learn More: Ethereum (ETH) Price Prediction 2024/2025/2030
Ethereum price analysis. Source: 10x Research
Meanwhile, poor price predictions may stem from the decrease in network activity on the mainnet, which has led to record low average transaction fees. According to blockchain analytics platform IntoTheBlock, more and more transactions are now settled on Ethereum Layer 2, with the three largest L2s accounting for 82% of all Ethereum transactions last month.
This coincides with the development of spot Ethereum exchange-traded fund (ETF) applications. On May 10, Ark 21 Shares revised their spot Ethereum ETF proposal and abandoned the staking plan.
Bloomberg ETF analyst Eric Balchunas said the revision was likely intended to refine the filing based on feedback from the U.S. Securities and Exchange Commission, which has not yet commented on the filing.
“While it seemed like they were putting together their filing based on the SEC’s comments (which would be good news), there was no comment. So it could be a Hail Mary, or it could be an attempt to give the SEC one less thing to reject them with. Not sure yet,” Balchunas said.
Spot ETH ETF approval chances. Source: Polymarket
Nonetheless, the amendment appears to have increased the likelihood of an Ethereum ETF getting approved as a spot ETF on on-chain prediction protocol Polymarket. Data on the site shows that the chance of approval nearly doubled to 14% as of May 10 after the applicant moved.
Still, expectations for approval remain muted as the SEC has expressed reservations about Ethereum ETF applications.
