Ethereum (ETH) has been facing significant selling pressure and fear in the market after experiencing a 23% decline, bringing its price down to yearly lows at $2,200. One of the factors contributing to Ethereum’s struggle is the declining on-chain activity. Total transaction fees on the Ethereum network have been decreasing, mainly due to lower fees after the Dencun upgrade. Additionally, the relative transaction count has plummeted from a record high of 27 in June 2021 to just 11, one of the lowest levels since July 2020. This decline in on-chain activity signals weaker network dynamics compared to Bitcoin, impacting Ethereum’s overall performance.
Another significant factor affecting Ethereum’s performance is the shrinking institutional interest in the cryptocurrency. Institutional investors have shown a clear preference for Bitcoin over Ethereum, as evidenced by the relative spot trading volume of ETH to Bitcoin dropping from 1.6 to 0.76 in the past week. This lack of institutional interest has put downward pressure on Ethereum’s price, as institutions flock to Bitcoin for perceived stability and long-term investment potential.
Furthermore, the underwhelming performance of Ethereum ETFs compared to Bitcoin ETFs has also contributed to Ethereum’s struggles. The Ethereum ETFs have not been able to keep up with the performance of Bitcoin ETFs, with the ETH/BTC pair now sitting at 0.0425, its lowest level since April 2021. This underperformance of Ethereum ETFs reflects a lack of confidence in Ethereum among investors and traders, further impacting the cryptocurrency’s price and market sentiment.
Ethereum (ETH) is currently trading at $2,262, significantly below its local highs after a 23% drop. The volatility and uncertainty in the market continue to drive Ethereum’s price action, with the cryptocurrency testing local demand near its yearly lows of $2,200. The price remains well below its 4-hour 200 moving average (MA) at $2,565, a critical indicator of market strength. For bulls to regain control, Ethereum needs to break above this moving average and challenge the local highs at $2,600. However, failing to hold support at the yearly low of $2,200 could signal the start of a bear market for Ethereum. Reclaiming these key levels is crucial for ETH’s short-term recovery and to prevent further downside pressure.
Ethereum’s struggle can be attributed to a combination of factors including declining on-chain activity, shrinking institutional interest, and underperforming ETFs compared to Bitcoin. These challenges have impacted Ethereum’s price performance and market sentiment. Moving forward, it will be essential for Ethereum to address these issues and regain investor confidence to prevent further underperformance compared to Bitcoin.