Ethereum Price Faces Downward Pressure Amid Ecosystem Challenges

Ethereum’s price has been declining for three consecutive days, with the coin experiencing a significant drop to $2,430 on Wednesday. This decline is a result of the coin underperforming Bitcoin and other major altcoins due to slowed exchange-traded fund inflows and persistent ecosystem challenges.

Declining Fees and Weakened Position in Decentralized Finance

According to recent data, Ethereum’s fees have continued to decline in recent months, with the network earning $9.8 million last week. This figure is significantly lower than last year’s weekly high of over $217 million. Moreover, other networks such as Tron, Jito, Solana, and Uniswap have surpassed Ethereum in fee generation this year.

Ethereum’s position in decentralized finance has also weakened, with the total value locked dropping 12.5% in the past 30 days to $54.32 billion. Despite this, Ethereum remains the largest player in the sector, with the stablecoin market capitalization rising to $121 billion.

Loss of Market Share to Layer-2 Networks

Ethereum has also lost market share to its layer-2 networks, including Base, Arbitrum, and Optimism. These networks now process substantial transaction volumes, with Coinbase’s Base overseeing more than $7.4 billion in cryptocurrency volume in the past seven days, and Arbitrum recording $5.7 billion.

Risk of Price Crash to $1,500

The daily chart shows that Ethereum has formed a series of lower lows and lower highs in recent weeks, resulting in a death cross pattern as the 200-day and 50-day moving averages intersect. This pattern, combined with the coin’s drop below the 61.8% Fibonacci retracement level and the oversold level of the Murrey Math Lines indicator, increases the risk of a price crash to around $1,530.

“A red crash warning would increase if Ethereum falls below the current support level at $2,130, the lowest point reached in August.”

Some key points to consider:

  • Ethereum’s price decline is a result of slowed exchange-traded fund inflows and persistent ecosystem challenges.
  • The coin’s fees have continued to decline in recent months, with other networks surpassing Ethereum in fee generation.
  • Ethereum has lost market share to its layer-2 networks, including Base, Arbitrum, and Optimism.
  • The risk of a price crash to around $1,530 increases if Ethereum falls below the current support level at $2,130.

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