Key takeaways:
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Lower network fees and slowing blockchain usage continue to weigh on ETH’s performance despite Ethereum’s institutional dominance.
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Ether’s recovery depends on stronger onchain activity, clearer upgrade benefits and renewed inflows from strategic reserve companies.
Ether (ETH) has struggled to retake the $4,000 level last seen on Oct. 29. Since then, every burst of bullish momentum has faded quickly, leaving traders questioning what’s restraining Ether’s performance despite Ethereum’s dominance in deposits and its strong institutional demand.
A key reason investors hold Ether is the staking yield and its role as a source of computing power for data processing. As such, a broad slowdown in blockchain activity naturally puts pressure on prices, even if the prior activity was driven by memecoin launches and speculative trading, both of which are unpredictable and unsustainable over time.
Ethereum has seen a 23% decrease in transactions over the past 30 days, with the number of active addresses falling by 3%. By contrast, transactions on Tron and BNB Chain rose by at least 34% in the same period, while Solana’s active addresses increased by 15%.
Competitors that are generally viewed as more centralized currently offer lower fees and a smoother user experience. For ETH to regain durable bullish momentum, the Ethereum network needs to enhance how decentralized applications interact with wallets and reduce friction in bridge usage.
The Ethereum spot exchange-traded fund (ETF) launched in the United States in mid-2024, roughly 16 months ahead of competing altcoins. Following the successful debut of Solana ETF in the US, traders now worry that competition for institutional capital will intensify as XRP (XRP), BNB (BNB) and Cardano (ADA) enter the market.
Inflows into Ethereum exchange-traded products fueled Ether’s 140% rally in the 100 days leading up to Aug. 9, when ETH reached $4,200 for the first time since December 2021. A potential rotation out of Ether could directly threaten its bullish momentum.
Ethereum network fees have plunged 88% since peaking at $70 million per week in late 2024, putting downward pressure on staking yields. Investors are now seeking clarity on the benefits expected from the upcoming Fusaka upgrade. While enhanced data processing through layer-2 rollups is welcome, there remains little transparency on how ETH holders will ultimately benefit.
Traders doubt Ethereum’s dominance will boost DApp revenues
Ethereum’s dominance in total value locked (TVL) and successful layer-2 adoption are undeniable. Still, traders question whether these strengths will translate into higher revenues for decentralized applications (DApps) built on Ethereum. Solana currently holds a competitive edge in DApps revenues, while emerging players such as Hyperliquid also present growing challenges.
While the expansion of Base adds moderate value to the Ethereum ecosystem, the easier onboarding enabled by its native integration with Coinbase does not fully reflect the broader layer-2 landscape.
Related: Community expects first US spot XRP ETF to launch on Thursday
Ether’s drop to $3,200 on Thursday has led companies accumulating ETH reserves to trade below their net asset value (mNAV). Under such conditions, the incentive to issue new shares to acquire ETH disappears, forcing these firms to explore alternative strategies such as raising additional debt.
Ultimately, Ether’s path back to $4,000 will depend on stronger onchain activity, rising network fees that support staking yields, greater clarity on the benefits of the upcoming Fusaka upgrade and renewed inflows from ETH strategic reserve companies.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
