ETH price has dropped to $2,548, marking a 9.6% decline from October 20 to 23, after failing to break above the $2,700 resistance level. The decline has erased the gains of the previous 10 days, and with Ether trading around $2,500, its 30-day performance remains negative, down 6%.

ETH’s chances of returning to the $2,800 support level are looking increasingly remote, and on-chain data shows that high transaction fees are driving activity away from the Ethereum network, thereby reducing staking demand.

Total Cryptocurrency Capitalization (Blue) vs. Ether/USD (Green) | Source: TradingView

The reason behind Ether’s decline is partly due to the fact that the total crypto market capitalization has dropped by 5% in the two days to October 23. However, the total market index is still up 1.9% over the past 30 days, which indicates that ETH has underperformed the overall market by 8% during this period. This underperformance explains the lack of optimism among Ether investors.

Ethereum Network Congestion and the Lack of a Clear Solution

While the average transaction fee on Ethereum reaching $4 over the past two weeks may reflect strong on-chain activity, it also highlights the appeal of competing blockchains with lower service fees. This may not be a significant issue for large investors or whales engaging in arbitrage, but it severely limits retail applications.

According to data from DefiLlama, the Solana network has recorded a transaction volume of $14.638 billion over the past seven days, 67% higher than Ethereum over the same period. This gap is widening, while before October, the two networks had nearly identical transaction volumes.

Blockchains ranked by 7-day DEX volume, USD | Source: DefiLlama

More notably, trading volume on Ethereum DEXs fell 13% in the seven days ending October 23, despite the broader market recovery. Both Uniswap and Curve Finance saw an 18% drop in activity on the Ethereum network during the same period. In contrast, Solana’s Raydium saw a 42% increase in volume, while Lifinity’s activity spiked 77% week-over-week.

Ethereum TVL Performance Disappoints Investors

In terms of total value locked (TVL), Ethereum disappointed many investors as TVL only reached 18.2 million ETH, down 5% from a month earlier.

A decline in staking deposits is often seen as a negative sign for ETH supply and demand. This is especially important when validators are unstaking ETH, and according to data from Staking Rewards, the Ethereum network has lost a net 191,000 ETH stake in the past 30 days, worth about $492 million at current prices.

From an on-chain perspective, Ethereum is losing ground to rival networks. Solana’s TVL has increased by 12% in SOL value, while the number of deposits on BNB Chain has remained stable over the past 30 days. Another factor that is causing investors to lose confidence in Ether’s price outlook is the uncertainty surrounding the upcoming Prague-Electra upgrade.

Scheduled for release in Q1 2025, the Prague-Electra upgrade will focus on improving scalability, including the introduction of Verkle trees to reduce node storage and EIP-7251 to improve validator performance. However, concerns remain about the delay and effectiveness of these improvements in addressing network congestion, making Ether’s long-term future challenging.

Source: https://tapchibitcoin.io/gia-eth-giam-lam-dat-ra-cau-hoi-ve-nen-tang-cua-ethereum.html