The price of Ethereum (ETH) rose to $2,700 on October 30, hitting its highest level in 10 days, but a strong rejection on October 31 caused the price to fall to $2,550. This move mirrors Bitcoin (BTC), which is down 4% from its October 29 high of $73,575.
Traders are now wondering what it will take for Ether to get back to $3,000. The answer may lie in a combination of lower transaction fees, greater institutional adoption, and greater incentives for ETH staking.
source: Joe Consortium
Joe Consorti, a Bitcoin proponent and builder at Theya Inc., said that while a spot Ethereum exchange-traded fund (ETF) in the U.S. failed to attract investor interest, a similar Bitcoin product raised $3.3 billion in just one week. It was pointed out that it attracted an influx of people.
Ethereum is losing market share and native staking is also declining.
It would be wrong to think that the reason Ethereum cannot trade above $2,700 is simply due to weak institutional demand. This is more of an effect than a cause. For example, Solana has surpassed Ethereum as the leading blockchain in decentralized application (DApp) trading volume.
Decentralized exchange trading volume by chain, weekly. Source: DefiLlama
Recent data shows that Solana is leading the way in decentralized exchange (DEX) trading volume. However, critics argue that Solana’s network relies heavily on memecoin trading activity, which surged in October. In contrast, Ethereum maintains strong demand from well-established decentralized finance (DeFi) applications such as Balancer, Curve, Pendle, and Ether.fi.
Ethereum continues to dominate when layer 2 volumes are aggregated, including networks such as Base, Arbitrum, Polygon, and Avalanche. This dominance is also evident in Total Value Locked (TVL). Here, Ethereum’s base layer holds $48.8 billion, while Solana holds $6.27 billion. So even if the memecoin craze continues, it is only a small part of the broader DApp market.
Ethereum’s transaction fees remain stagnant despite on-chain DApp volume reaching $116 billion in 30 days, according to DappRadar. According to StakeRewards data, the reward rate for ETH staking is 3.4%, while Solana’s is 6.5% and Tron’s is 4.5%. As a result, Ethereum recorded a net withdrawal of 180,000 ETH from staking during the same period.
The best blockchain for staking data. Source: StakeRewards
Ethereum developers are addressing these issues with the upcoming Ethereum improvement proposal EIP-7742, which introduces dynamic Blob (ephemeral data layer) costs and maximum values. Vitalik Buterin discussed moving away from a fixed number of blobs, warning that continuous operation at full capacity could hinder scalability.
The Ethereum Pectra upgrade, scheduled for Q1 2025, aims to expand the maximum block size from the current 1MB to 2.7MB, as described in EIP-7623. The ongoing debate focuses on how to reconcile the demand for low-cost transactions with the need for adequate rewards for ETH staking.
relevant: Ethereum likely ‘finally falls’ to $2.5K before ETH hits new all-time high — Analyst
Ether’s journey toward a $3,000 valuation relies heavily on institutional adoption and has been hampered in part by the strict policies of the U.S. Securities and Exchange Commission, which has blocked calls for a spot Ethereum ETF that uses a staking strategy. Conversely, Bitcoin’s strict monetary policy has resonated with some of the world’s largest professional investors.
The Ethereum network, once hailed by proponents as an “ultra-currency,” now faces challenges due to increased supply and over-optimization for layer 2 activity. Although this is operationally beneficial, it can compromise security sustainability. Therefore, sustainable ETH price growth will depend on significant modifications to the network structure.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.