Ether (ETH) has made several recoveries above $2,500 since the early August crypto sell-off but has been unable to sustain above this important price level.
ETH price eyes sixth straight red daily candle
Market participants anticipated spot Ethereum exchange-traded funds (ETFs) flows to boost ETH’s price once they began trading on July 23.
At the time of writing, Ether is headed for its sixth straight day in the red, with $2,500 posing stiff resistance. Meanwhile, several technical and onchain metrics are pointing to a further correction.
Let’s take a closer look at what’s hurting ETH's price and why the $2,500 level is crucial.
ETH/USD daily chart. Source: TradingView
Weak spot Ethereum ETF flows
Ether has also been struggling with spot Ethereum ETFs, which saw more than $10.9 million in net outflows on Nov. 1. In fact, these investment products have recorded $478.5 million in outflows since their market debut in the United States on July 23.
The lack of investor interest is concerning, especially since institutional demand was considered a key part of Ether’s appeal, as Ether’s gains occurred on May 21, two days before the ETFs were approved by the Securities and Exchange Commission.
Spot Ether ETF flows table. Source: Farside Investors
This is also reflected across all other Ether products, with the latest Digital Asset Fund Flows Weekly Report by CoinShares pointing out that flows into Ethereum investment funds remain in contrast to the bullishness seen in Bitcoin (BTC) and Solana (SOL), with only $9.5 million inflows during the week ending Nov. 1.
In comparison, institutional investors poured more than $2.1 billion into Bitcoin investment products.
Part of Ether’s failure to sustain a recovery above the $2,500 resistance comes from unmet expectations that ETF flows would mirror those into spot Bitcoin ETFs, resulting in BTC price rallying to new all-time highs in March.
Increasing L1 competition
Ethereum’s high gas fees offer an opportunity for competing layer-1 blockchains focusing on high scalability to eat into its market share in the space. While a fraction of the activity has moved to Ethereum layer-2 solutions, some users and developers are opting for other top layer-1 alternatives such as the BNB Chain (BNB), Solana and Tron (TRX).
As a result, Ethereum’s network activity growth has fallen behind its rivals’ as more users opt for lower-fee ecosystems.
Top blockchains ranked by 24-hour DApps volume, USD. Source: DappRadar
For example, Ethereum’s unique active wallets (UAW) engaging with decentralized applications (DApps) on the platform declined by 16% over the last 30 days compared to a 19% increase on Solana and a 75% increase on Avalanche.
Similarly, the total volume transacted on the Ethereum network dropped by 9.6% during the same period, while the volume on the BNB Chain, Solana and Avalanche increased by 1.5%, 10% and 60%, respectively.
ETH dominance hits 3-year lows
Ethereum’s lackluster network fundamentals against its rivals are also reflected in decreasing market share.
Ether’s market dominance continued its downward trajectory in 2024, reaching a 42-month low of 13% on Nov. 4. This indicates that the largest altcoin by market capitalization is losing market share to Bitcoin and other altcoins.
Ether market dominance chart. Source: TradingView
Since Ethereum is the only altcoin with its own spot ETH, Ether’s market dominance downtrend, and prices, will depend on ETF inflows, argues popular crypto analyst Max Price, who said:
“follow the money id only think about moving into eth if etf inflows start to pick up.”
Meanwhile, fellow analyst The Great Martis is sounding the alarm that ETH’s chart is showing “bearish tendencies” with a possible downward breakout to areas below $1,000.
Source: The Great Martis
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
