Originally published on: October 31, 2024
Ether (ETH) surged to $2,700 recently before experiencing a slight dip to $2,550. This movement closely followed Bitcoin’s decline from its peak of $73,575. Traders are now looking for clues on how Ether can reclaim the $3,000 mark. Factors such as reduced transaction fees, increased institutional adoption, and improved incentives for ETH staking play a crucial role in this scenario.
Joe Consorti, a Bitcoin enthusiast and developer at Theya Inc., highlighted the lack of interest in spot Ethereum exchange-traded funds (ETFs) in the US compared to the significant inflows seen by Bitcoin funds. However, attributing Ether’s struggles to weak institutional demand overlooks the deeper issues at play. For instance, Ethereum faces competition from networks like Solana in decentralized application transactions.
Despite Solana leading in decentralized exchange volumes, Ethereum maintains its dominance in the broader decentralized finance (DeFi) market, hosting popular applications like Balancer, Curve, and Pendle. Additionally, Ethereum leads in layer-2 volumes and total value locked (TVL), showcasing its resilience despite challenges.
One of the key challenges for Ethereum is its transaction fees, which have remained stagnant despite high onchain DApp volume. The upcoming Ethereum Improvement Proposal EIP-7742 aims to address this concern by introducing dynamic blob costs and maximum values to enhance scalability.
Looking ahead, the EthereumPectra upgrade in 2025 aims to boost block size, but debates continue on balancing low-cost transactions and rewarding ETH staking adequately. Institutional adoption of Ethereum is also hindered by regulatory barriers, posing obstacles to reaching a $3,000 valuation.
As Ethereum navigates supply challenges and optimizes for layer-2 activities, the path to a sustainable price rally hinges on structural modifications to ensure network security and sustainability. Stay informed with critical insights and market opportunities by subscribing to the Markets Outlook newsletter.
