Originally published on: October 17, 2024
Are the ‘L1 wars’ to blame for Ether’s seven-month decline? According to one analyst, competition among top blockchain networks is threatening to push the price of the world’s second-largest cryptocurrency even lower.
Ether, currently priced at $2,626.58, has seen a significant drop of over 36% in the last seven months. This downtrend, from a high of $4,111 in March 2024, shows no signs of slowing down, as per data from Cointelegraph.
The ongoing battle for innovation in layer-1 (L1) blockchains is a key factor contributing to Ethereum’s struggles, says crypto analyst Ignas. In a recent post, Ignas highlighted the importance of this competition for the industry as a whole, suggesting that it opens up opportunities for other networks to shine in different use cases.
The ‘L1 war’ refers to the race among blockchain networks like Ethereum, Solana, Avalanche, and Fantom to address the blockchain trilemma – achieving security, scalability, and decentralization simultaneously.
Ethereum’s ecosystem fragmentation, primarily due to the rise of L2 networks, has led to a shift in investor interest towards other tokens like Solana (SOL). This trend has been reflected in the price performance of Solana, which has outperformed Ether significantly over the past year.
While Solana has seen impressive gains of over 552%, Ether’s rise has been comparatively modest at 57%. Despite this, both cryptocurrencies are experiencing similar downtrends, indicating a broader market trend at play.
Technical analysis suggests that Ether could be gearing up for a correction, with a potential target price above $2,400. This correction could coincide with Bitcoin’s struggles to break its own downtrend, putting pressure on the overall cryptocurrency market.
As the battle among blockchain networks intensifies, investors and traders will need to keep a close eye on developments to navigate the ever-changing landscape of the crypto industry. Sign up for our Finance Redefined newsletter to stay informed and ahead of the curve on the latest DeFi developments and financial opportunities.
