Market Concerns Arise as Ethereum Falls Below 2500

Bijie.com reports:
Recently, the decline in the price of Ethereum indicates a broader potential selling pressure in the cryptocurrency market, but the continued weakness of Ethereum can be attributed to some specific network factors.


From October 20th to October 23rd, the price of Ether experienced a heavy blow 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 is still stable at around $2,500, the overall performance for the month has still fallen by 6%, and the possibility of returning to the $2,800 support level is decreasing. On-chain data shows that the high transaction fees have significantly reduced network activity, thereby reducing the quantity and demand for native token staking. The total market value of cryptocurrencies fell by 5% in the first two days, and the upward trend of Ether’s price was also hindered. 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 network has been $4 per transaction, indicating strong on-chain activity. However, the high transaction fees have also led large investors and arbitrageurs to turn to competing blockchains that prioritize low transaction fees. Data shows that in the past seven days, the transaction volume on the Solana blockchain was $13.4 billion, 67% higher than Ethereum. Ten months ago, the difference in transaction 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 the two blockchains. DEX trading volume on Ethereum has fallen by 13%. Uniswap and Curve Finance both experienced an 18% decrease in activity on Ethereum, while Raydium on Solana saw a 42% increase and Lifinity’s activity 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 negatively impacted the dynamic balance of supply and demand, indicating that validators have been reducing the 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 increased by 12% when calculated in SOL, and BNB Chain remained relatively stable. Finally, attention needs to be paid to the Prague-Electra upgrade scheduled for the first quarter of 2025, which has raised concerns among investors. Although the focus of this upgrade is to introduce Verkle trees to reduce node storage and EIP-7251 to improve validator efficiency, it remains a mystery whether its potential delays and other changes can solve Ethereum’s congestion issues. This challenge is a key factor in whether Ethereum’s price can remain resilient in the long term.