As a seasoned crypto investor with a decade of experience under my belt, I must say that the current state of Ether is a familiar dance we’ve seen before. The seven-month downtrend and the competition among top blockchains are reminiscent of 2017-2018, when Bitcoin was the undisputed king, and Ethereum was still finding its footing.
Ether’s price trend has been stagnant for seven months due to intense competition between leading blockchain platforms, which may cause additional drops for the second-ranked cryptocurrency worldwide.
As an analyst, I’ve observed a significant drop in the price of Ether (ETH) over the past seven months. From its yearly peak of $4,111 in March 2024, as per CryptoMoon data, it has now dipped to around $2,600. This represents a decline of more than 36%.
According to a pseudonymous crypto expert known as Ignas, the slow movement in Ethereum’s price might stem from its decreased dominance in the race for cutting-edge innovations on Layer-1 (L1) blockchains.
The analyst wrote in an Oct. 16 X post:
“Overall, Ethereum isn’t the winner of the L1 wars. The value accrual from all L2s is not yet clear as well.”
Ignas noted that this development is beneficial for the crypto industry since it opens up opportunities for expansion and growth of other Level 1 (L1) networks that could excel in various applications.
In simpler terms, the term “L1 war” signifies a fierce competition among leading blockchain platforms such as Ethereum, Solana, Avalanche, and Fantom. They are all striving to tackle the blockchain trilemma, which is about achieving an optimal balance between security, scalability, and decentralization without compromising any of them excessively.
Is Solana attracting Ether’s market share?
A possible rephrased version could be: One potential explanation for Ether’s slow price growth might be the division in value that arises from Ethereum Layer 2 (L2) networks. These networks draw investments within the Ethereum ecosystem towards their own cryptocurrencies, which may divert attention and resources away from Ether.
This could make monolithic blockchains like Solana more attractive for investors, wrote Ignas:
“Solana is the biggest slap in the face of ETH Maxis. As more L2s kept launching, the liquidity and UX fragmentation problems worsened. With each L2, Solana’s monolithic approach became more attractive.”
According to Ignas, the fragmentation within Ethereum’s ecosystem resulted in ETH owners choosing to invest in other Layer 1 tokens such as Solana (SOL).
In comparison to Ether’s price increase, the SOL token has shown a remarkable growth of more than 552% during the last year, whereas Ether only increased by 57%.
Yet, Solana remains in a seven-month downtrend since March 2024, mirroring Ether’s price action.
Will Ether price correct to $2,400?
Ether could be setting up for a correction based on technical trading patterns.
Based on a developing technical trend visible on the one-hour chart, cryptocurrency analyst Justin Bennet predicts that Ethereum (ETH) might experience a price drop to approximately $2,400. In a recent post on October 17th, he shared this insight.
“It’s not a pattern I trade, but $ETH could be forming a diamond reversal pattern. The objective is $2,485 if it confirms with a close below support.”
The ongoing challenge for Bitcoin (BTC) to overcome a 217-day downward trend is putting strain on the broader crypto market as well.
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2024-10-17 13:00