Ether (ETH) price fell 9.6% from October 20 to October 23 after experiencing a strong rejection at the $2,700 level. This move erased the gains of the previous 10 days, and the 30-day performance remains negative, down 6%, with the Ethereum price now stabilizing near $2,500.
The chances of ETH reclaiming $2,800 support are decreasing, and on-chain data shows that high transaction fees are driving activity away from the Ethereum network and ultimately reducing demand for native staking.
Total cryptocurrency market cap (blue) and Ether/USD (green). Source: TradingView
Some of Ether’s recent decline can be attributed to the overall cryptocurrency market cap falling 5% in the two days ending October 23rd. However, the broader index is still up 1.9% over the past 30 days, indicating that ETH has underperformed the market. During this period, the market increased by 8%. This poor performance helps explain the lack of optimism among Ether investors.
Ethereum network congestion and lack of clear solution
Ethereum’s average transaction fee of $4 over the past two weeks may suggest strong on-chain activity, but it also strengthens the appeal of competing blockchains that offer cheaper services. This issue is less important for large investors or whales involved in arbitrage, but it severely limits some smaller use cases.
According to DefiLlama, the Solana network recorded $13.4 billion in trading volume over the past seven days, which is 67% higher than Ethereum’s activity over the same period. This gap has widened considerably, as transaction volumes on both networks were similar before October.
Blockchains ranked by 7-day DEX trading volume (USD). Source: DefiLlama
More importantly, Ethereum’s decentralized exchange (DEX) trading volume fell 13% in the seven days ending October 23. Even though the broader market is gaining momentum. Both Uniswap and Curve Finance saw an 18% decline in Ethereum network activity during this period. On the other hand, Solana’s Radium’s trading volume increased by 42% compared to the previous week, and Refinity’s trading volume surged by 77%.
Ethereum’s performance in terms of total value locked (TVL) disappointed investors, with TVL reaching 18.2 million ETH, down 5% from a month ago.
Ethereum Total Value Lock (TVL), ETH. Source: DefiLlama
A decline in the number of deposits is generally considered negative for the supply and demand dynamics of ETH. This is especially relevant when validators withdraw Ether from staking, which is what is happening right now. According to Stake Rewards data, the Ethereum network saw a net decline of 191,000 ETH staked in the 30 days ending October 23, equivalent to $492 million at current prices.
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From an on-chain perspective, Ethereum is losing ground to competing networks. Solana’s TVL has increased by 12% in SOL terms, while deposits on the BNB chain (BNB) have remained stable over the past 30 days. Another factor causing investor disappointment regarding Ether’s price outlook is the uncertainty surrounding the upcoming Prague-Electra upgrade.
The Prague-Electra upgrade, initially expected in Q1 2025, focuses on scalability improvements, including the introduction of Verkle trees to reduce node storage and EIP-7251 to increase validator efficiency. However, concerns remain about potential delays and whether these changes will sufficiently address the network’s congestion issues, which remain a key element of Ether’s long-term growth prospects.
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.