As a seasoned crypto investor with over a decade of experience in this dynamic world, I have witnessed the rise and fall of countless digital assets. The recent fluctuations in Ether (ETH) prices, reaching $2,700 on Oct. 30 but then plummeting to $2,550, mirroring Bitcoin’s (BTC) decline, are a familiar sight.
On October 30, Ether’s (ETH) value peaked at $2,700, reaching the highest point in ten days. However, a significant drop occurred on October 31, causing its price to fall to $2,550 due to strong resistance. This trend was similar to Bitcoin (BTC), which experienced a 4% decrease from its high of $73,575 on October 29.
Currently, traders are contemplating the conditions that might lead Ether to return to the $3,000 level. This may be achieved through a mix of lower transaction costs, increased acceptance by institutions, and improved rewards for Ethereum staking.
In simpler terms, Joe Consorti – a proponent of Bitcoin and an active member at Theya Inc. – mentioned that U.S.-based Ethereum exchange-traded funds (ETFs) haven’t piqued investor curiosity as much, whereas comparable Bitcoin investment vehicles drew in $3.3 billion within a week.
Ethereum is losing market share, and native staking is declining
It’s incorrect to pinpoint Ether’s failure to surpass $2,700 solely on weak institutional demand; rather, this seems to be an effect rather than a catalyst. For example, Solana has surpassed Ethereum in terms of transactions for decentralized applications (DApps). In simpler terms, it appears that the lackluster institutional demand might not be the primary reason behind Ether’s price stagnation, as we see other platforms like Solana gaining traction.
Recent data shows Solana leading in decentralized exchange (DEX) volumes, but critics argue that its network heavily relies on memecoin trading activity, which spiked in October. In contrast, Ethereum sustains robust demand from well-established decentralized finance (DeFi) applications like Balancer, Curve, Pendle, and Ether.fi.
As a researcher delving into decentralized applications (DApps), I’ve noticed an ongoing dominance of Ethereum when considering cumulative volumes across layer-2 networks such as Base, Arbitrum, Polygon, and Avalanche. This supremacy is further highlighted in the Total Value Locked (TVL) metric, where Ethereum’s base layer boasts a staggering $48.8 billion compared to Solana’s $6.27 billion. Despite the memecoin frenzy, it’s essential to recognize that this segment only represents a minor fraction of the broader DApps market.
As a researcher delving into the dynamic world of blockchain, I’ve noticed an intriguing paradox: Although Ethereum boasts a substantial $116 billion in on-chain DApp volume over 30 days (as per DappRadar), its transaction fees have remarkably remained stationary. Interestingly, data from StakingRewards reveals a 3.4% reward rate for ETH staking, which is significantly lower compared to Solana’s 6.5% and Tron’s 4.5%. This discrepancy has led to a net withdrawal of approximately 180,000 ETH from staking over the same period.
Developers of Ethereum are tackling this issue with the forthcoming Ethereum Improvement Proposal EIP-7742. This proposal introduces adjustable costs for temporary data layers (dynamic blobs) and maximum limits. Vitalik Buterin has voiced his concerns about the ongoing use at full capacity, as it might impact scalability by working under constant strain. In simpler terms, they’re making changes to better manage temporary data and prevent overloading the system, which could slow down its ability to grow or expand in the future.
In Q1 of 2025, the expected Ethereum Pectra update plans to boost the maximum block size from the current 1 MB to 2.7 MB, as per EIP-7623. The ongoing discussion revolves around finding a balance between affordable transactions and fair compensation for staking ETH.
Ethereum’s path to a $3,000 valuation is largely dependent on institutional acceptance, but this progress may be slowed by the rigid regulations of the U.S. Securities and Exchange Commission, which have rejected proposals for spot Ethereum ETFs that incorporate staking strategies. In contrast, Bitcoin‘s strict monetary policy has found favor among some of the world’s most influential institutional investors.
Originally touted as “digital money equivalent to ultrasound” by its advocates, the Ethereum network currently grapples with issues of escalating supply and excessive optimization for layer-2 operations. While these adjustments are operationally advantageous, they could potentially undermine the network’s security and sustainability in the long run. Consequently, a durable rally in ETH price may rely on substantial changes to the network’s underlying structure.
As a researcher, I’d like to clarify that the insights shared in this write-up are intended to provide a broad understanding and should not be construed as legal or investment advice. The perspectives, ideas, and viewpoints expressed here are my own and may not align with or be endorsed by CryptoMoon. Always consult with a qualified professional for matters pertaining to law or investments.
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2024-10-31 21:31