Ethereum (ETH) has been facing significant selling pressure recently, with its price plummeting by 23% to yearly lows of $2,200. One of the main reasons behind this decline is the diminishing on-chain activity of Ethereum. The total transaction fees on the Ethereum network have been on a downward trend, mainly due to lower fees following the Dencun upgrade. Additionally, the relative transaction count has also seen a significant drop from a peak of 27 in June 2021 to just 11, one of the lowest levels since July 2020.
Shrinking Institutional Interest
Another factor contributing to Ethereum’s struggles is the shrinking institutional interest in the cryptocurrency. While Bitcoin continues to attract institutional investors, Ethereum seems to be losing its appeal. This lack of interest from institutional players has put pressure on Ethereum’s price, causing it to underperform compared to Bitcoin.
Furthermore, the underwhelming performance of Ethereum ETFs compared to Bitcoin ETFs has also impacted the price of Ethereum. The ETH/BTC pair is currently sitting at 0.0425, its lowest level since April 2021. This underperformance is a clear indication that traders and investors prefer Bitcoin over Ethereum, leading to a decrease in Ethereum’s spot trading volume relative to Bitcoin.
Ethereum’s supply dynamics are not supportive of a price increase, with the total supply of ETH steadily growing since the Dencun upgrade in early April. The current supply is at 120.323 million ETH, the highest level since May 2023. This increase in supply, coupled with the declining on-chain activity and shrinking institutional interest, is putting additional pressure on Ethereum’s price.
Ethereum (ETH) is currently trading at $2,262, far below its 4-hour 200 moving average (MA) at $2,565. This moving average is a critical indicator of market strength, and Ethereum’s failure to break above it suggests further downside potential. Bulls need to regain control and push the price above this moving average to challenge the local highs at $2,600. However, if Ethereum fails to hold support at $2,200, it could lead to a deeper correction phase and potentially signal the start of a bear market.
Ethereum’s recent struggles can be attributed to a combination of factors, including declining on-chain activity, shrinking institutional interest, and underwhelming performance compared to Bitcoin. These factors have put significant selling pressure on Ethereum, causing its price to plummet to yearly lows. To regain momentum, Ethereum will need to address these issues and attract more investors and traders back to the platform.
