Ether Price Hits 7-Month Low Amid Layer 1 Wars, Claims Analyst

0
165
Ether Price Hits 7-Month Low Amid Layer 1 Wars, Claims Analyst

Ether, nevertheless, stays contained in a seven-month decrease as a rise in competitors for the key blockchain platforms of the primary altcoin persists to weigh on the second-largest digital forex by market worth.

Ether (ETH) has declined more than 36% since March 2024, from a year-to-date high of $4,111 to the current $2,600.

Ethereum’s Struggle in the Layer-1 Wars

There is so much competition at the Layer-1 stage that Ethereum has been struggling so far in layer-1 wars.

Crypto analyst Ignas, posted on X on Oct. 16, blamed dismal price returns on Ethereum’s declining competitiveness for supremacy in the L1 space. “In all its glory,” the analysts said while sharing their thoughts on the state of the market, “Ethereum isn’t the winner of the L1 wars,” and the effects of layer-2 (L2) remain to be seen.

The so-called L1 war means that mainstream public chains such as Ethereum, Solana, Avalanche, Fantom, and other chains are all competing to strike the best balance of size, safety, and decentralization to solve the problem of blockchain trilemma continuously.

Ether’s price range also lacks growth, which is linked to value fragmentation between multiple L2 solutions. These solutions attract Ethereum ecosystem funds into their own tokens.

Crypto analyst Ignas reported that the fragmented structure of the Ethereum ecosystem had led many holders to dump ETH to make way for other Layer-1 (L1) coins, such as Solana (SOL).

Ethereum’s Short-Term Price Recovery

The fluctuations and the short-term price of Ethereum after that SOL has experienced an increase of more than 552% over the past year, which is more than any increase experienced by Ether in the same period, which is 57%. However, Solana is now in a seven-month bearish trend starting from March 2024 and follows Ether’s price movement.

Thus, according to the indicators on the charts, Ether may be ready for a short-term bounce at least. Crypto trader Justin Bennet points out a new pattern on the 1-hour timeframe, indicating that ETH can turn back towards the $2,400+ area.

The Institutional Analysis & Trading desk of Coinbase and popular on-chain analysis firm Glassnode released a joint weekly update on Wednesday, sharing some silver linings for Ethereum.

Again, the report says that Ethereum has bounced back to play a higher fee share within fee-charging L1 blockchains, from a lower stake of 9% fee-shares toward the end of August to a higher stake of 40% fee-shares toward the end of September. The rebound suggests a higher engagement on Ethereum’s platform.

The analysts also pointed out that there was renewed buying interest from institutions in ETH as the US spot Ethereum Exchange Traded Fund (ETF) flow reverted to positive in the last week of Q3 after weeks of negative flow.

https://twitter.com/JustinBennettFX/status/1846686777576509707

Furthermore, the report also revealed Ethereum staking hit a record high in the third quarter as more people tried to earn a yield on their coin.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.