10 hours Ago
Ethereum is showing signs of weakness due to declining fees and low network usage, while Solana gains traction. However, whale accumulation and ETF inflows point to renewed confidence. With the Pectra upgrade set to go live on May 7, ETH could be poised for a rebound.
Investors are watching closely for signs of a breakout. Ethereum (ETH) trades at $1,798.11 as of April 30, 2023, at 1:59 PM with a meager gain of 0.
69% within the last 24 hours. The price rally is significantly smaller compared to Ethereum's performance during one of its worst periods in recent times, marked by notably low network fees, a diminished total value locked (TVL), and stiff competition from upcoming alternatives like Solana. The question remains: Is Ethereum losing steam, or is it resting before another breakout? Ethereum's Fee Collapse Signals Diminished Exercise Activity One of the most glaring signs is the downward trend of Ethereum's network fees.
As of now, the average transaction fee has been reduced to an incredible low of $0.168, a figure that has not been reached in the last five years. Low gas fees might bring smiles among users, but in Ethereum's case, they simply denote less on-chain activity.
The demand for network fees on Ethereum has also translated as follows: demand from users typically increases whenever transactions involving smart contracts occur. Inversely, it is assumed that very low fees indicate low usage, which suggests that the activity of dApps, DeFi platforms, and NFT marketplaces may be lower than usual. Moreover, this drop in usage compared with the early maximum heights of 2024 shows a transformed dimension in its economic engine.
Ethereum Losing Ground to Competitors In the meantime, Solana has seen an increase in both the total number of users compared to other areas, as well as in total value locked (TVL) figures, implying a shift in interest among developers and investors. Within just one week, Solana's TVL rises by 4.4%, while Ethereum's falls by 3%, continuing a long-term trend that has spanned 30 days and shows an 8% decline for ETH-based platforms.
This gap arises from Ethereum's ongoing difficulty in terms of scalability compared to layer 2s, such as Arbitrum, Optimism, or Base. These all reduce congestion on the mainnet; at the same time, they segment user activities, blurring primary on-chain metrics. Whale Activity and ETF Flows Hint at Positive Change Even though on-chain activity slows down, it appears that smart money is again quietly accumulating some ETH.
Glassnode and WhaleStats claim that Ethereum whales have drained over $50 million worth of ETH in the last several weeks, following a steep sell-off period earlier in April, during which approximately 143,000 ETH were liquidated. The flow of institutional capital amplifies this narrative of rebound. Ethereum-related ETFs saw net inflows of $157.
09 million between April 21 and April 25, snapping a streak of eight consecutive weeks with net outflows totaling more than $700 million. This turn of events is seen as a reflection of optimism that Ethereum is undervalued at current levels and may recover in price, especially with critical upgrades on the horizon. The Pectra upgrade: Ethereum's next big test The upgrade Pectra is one of the significant anticipated catalysts for Ethereum's rebirth, expected to go live on May 7, 2025, barring any unforeseen delays.
For its part, the Prague-Electra hard fork will indeed promise a wide range of improvements, such as: Higher staking ceilings and self-service withdrawals, thus making ETH staking much more flexible. Accelerated validator activation translates to fewer delays in node participation. Stablecoin fee payment support, making a more user-friendly Ethereum, and reducing the volatility risk.
It enhances the capacity of Layer-2 blobs, doubling them from three to six, and alleviates congestion in L2 rollups. Such measures shall primarily seek to decrease transaction latency and costs for end-users while increasing scalability, which are some age-old issues that deter users from using other blockchains. The second phase of the upgrade is expected to be rolled out at the end of 2025 or the beginning of 2026 to enhance storage and verification further, building on the progress made through the Dencun upgrade, which was activated earlier in the year.
Technical Outlook: ETH at a Pivotal Point Ethereum has broken above its downward channel, testing resistance at the 50-day EMA ($1,863). The MACD indicator has also flipped positive, and momentum is gradually improving. If ETH can breach the $1,860-$1,900 resistance, bulls are likely to target the $2,163 and $2,482 levels identified by the 100-day and 200-day EMAs, respectively.
Support remains solid near $1,540, with dips below $1,600 continuing to attract buying interest, chiefly from long-term holders and institutions. Conclusion: Ethereum's Quiet Before the Storm? Ethereum, without any doubt, is in a transition phase- diminished activity and heightened competition, it would be the last word to count it absent. Whales are accumulating, ETF inflows have turned positive, and the upcoming Pectra upgrade could breathe new life into the ecosystem.
Risks remain, but market volatility across the board leaves the excited free agents in Ethereum's wake..
