Market concerns sparked as Ethereum falls below 2500

Coin World Report:
Recently, the drop in Ethereum’s price indicates a broader potential selling pressure in the cryptocurrency market, but Ethereum’s continued weakness can be attributed to some specific network factors.


From October 20th to October 23rd, the price of Ether plummeted at the $2,700 level, falling 9.6% in a short period of time, wiping out the gains of the previous 10 days. Although the current price remains stable at around $2,500, the overall performance for the month has still declined by 6%, and the possibility of returning to the $2,800 support level is diminishing. On-chain data shows that high transaction fees have significantly reduced network activity, thereby lowering the quantity and demand for native token staking. The total market value of cryptocurrencies fell by 5% in the first two days, and Ether’s price momentum was also affected. On the other hand, while the overall market increased by 1.9% for the month, the price of ETH fell against the trend, indicating that Ethereum investors still lack confidence in it.
Ethereum network congestion and lack of clear solutions
In the past two weeks, the average transaction fee on the Ethereum blockchain has been $4 per transaction, indicating strong on-chain activity. However, the high transaction fees have also led large investors and arbitrage whales to turn to competing blockchains that emphasize low transaction fees. Data shows that in the past seven days, the trading volume on the Solana blockchain was $13.4 billion, which is 67% higher than that of Ethereum. Ten months ago, the difference in trading volume between the two was not significant, indicating that more and more investors are inclined to use the Solana blockchain. In addition, there have been significant differences in the performance of Dapps on both blockchains. DEX trading volume on Ethereum has decreased by 13%. Uniswap and Curve Finance have both experienced an 18% decrease in activity on Ethereum, while Raydium on Solana has grown by 42%, and Lifinity’s activity has surged by 77% compared to the previous week.
In terms of Total Value Locked (TVL), Ethereum’s performance has disappointed investors, with a TVL of about 18.2 million ETH, a 5% decrease from a month ago. This has had a negative impact on the dynamic balance of supply and demand, indicating that validators have been reducing their staked ETH. Staking Rewards data shows that in the 30-day period ending on October 23rd, validators staked a net decrease of 191,000 ETH, with a total value of approximately $492 million. In contrast, during the same period, Solana’s TVL, calculated in SOL, increased by 12%, while BNB Chain remained relatively stable. Lastly, it is worth noting that the upcoming Prague-Electra upgrade in the first quarter of 2025 has also raised investor concerns. Although the focus of this upgrade is to introduce Verkle trees to reduce node storage and EIP-7251 to improve validator efficiency, whether its potential delays and other changes can solve Ethereum’s congestion issues still remains a mystery. This challenge is a key factor in whether the Ethereum price can remain strong in the long term.