With ETH Price Languishing for So Long, Is It Really Over?

2024-09-26, 08:01

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![](https://gimg2.gateimg.com/image/article/17273369171692587449analysis.jpeg)
## [TL；DR]: 
In the past two years, the exchange rate of ETH/BTC has continued to decline, with a drop of up to 50%.
 
ETH is facing many challenges in Layer 1 and has insufficient ability to capture its own value, causing its market share to gradually decline and market sentiment to remain weak. The launch of spot ETFs has also failed to alleviate this dilemma.
 
The booming development of the Restaking track and the upcoming Prague upgrade at the end of the year are expected to further unleash the value of the <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> ecosystem, driving positive price discovery.

## Introduction
In the past year, the performance of the Ethereum market price was relatively sluggish, especially after ETH/BTC hit a new low. People's hopes for the future direction of Ethereum have fallen into criticism and condemnation, which can be said to be a rare FUD moment for the "king of chains." This article aims to delve into the current market sentiment of Ethereum, as well as the various challenges and doubts it faces after its transformation.
 
## ETH Price Continues to be Weak, and Spot ETFs Continue to Experience Net Outflows
Since September, the overall price trend of the <a href="/price" target="_blank" class="blog_inner_link">crypto market</a> showed a deepening correction, especially after ETH/BTC fell below 0.04 and hit a new low. The market's pessimistic sentiment towards ETH has again spread.
 ![](https://gimg2.gateimg.com/image/article/17273372501.jpg)
Source: Gate.io
 
As early as 2022, when Ethereum was transitioning to Proof of Stake (PoS) mechanism, the market hoped that this change could drive token deflation and meet the growing demand for applications, thereby boosting prices. However, the price and ecosystem performance over the past two years have not been as significant as expected.
 
Judging from the bull market trend in the past two years, the price trend of ETH has indeed encountered many challenges, especially when compared to other mainstream cryptocurrencies such as BTC and SOL. Its performance appears inferior and unsatisfactory.
 
As for this year's trend, ETH's price hovered around $2,280 at the beginning of the year. Although it briefly hit a high of nearly $4,000 in March, it then entered a long downward channel until it fell to a low of $2,100 in early August. At that time, the market exclaimed the instantaneous 20% decline had caused a liquidity crisis for ordinary altcoins.
 
Currently, ETH has risen to around $2,600 near the 60 moving average, but the increase this year is minimal.
 ![](https://gimg2.gateimg.com/image/article/17273372862.jpg)
Source: Gate.io
 
In addition, the comparison with BTC also highlights the dilemma of ETH. In the past two years, the exchange rate of ETH/BTC has continued to decline, with a drop of up to 50%. At the same time, with the rise of projects such as <a href="/price/solana-sol" target="_blank" class="blog_inner_link">Solana</a>, Sui, and Ton, SOL/ETH has seen a significant increase over the past year, while ETH's market share has gradually declined, dropping from 16% at the beginning of the year to the current 14%, indicating that its dominant position in the market is being challenged.
 
Such a weak trend, even the unexpected approval of ETH's spot ETF did not raise the coin price as expected, replicating the prosperity brought by BTC's spot ETF. On the contrary, since the launch of the ETF, trading volume continued to decline, reflecting a weakened interest from institutional investors and further exacerbating market pessimism.
 ![](https://gimg2.gateimg.com/image/article/17273373353.jpg)
Source: coinglass

The apparent weakness in prices has naturally raised doubts among the community about ecosystem planning and development, and even called for Ethereum to be replaced by Solana. This is indeed the "darkest moment" for Ethereum.
 
## Multiple Reasons Led to Price Fluctuations
ETH is currently facing a dilemma of low price and continuous market questioning. To explore the reasons for its sluggish prices, we need to see the negative impact of the macro economy, and analyze its shortcomings from the perspective of the Ethereum ecosystem itself. After all, the two-year weak trend is not just a result of external environmental factors.
 
Firstly, in the past two years, there was uncertainty in the global macroeconomy, including geopolitical conflicts, inflationary pressures, and high interest rate environments. As a result, investors are more inclined to hold low-risk assets, such as the US dollar, leading to a decrease in their interest in risky assets, such as cryptocurrencies.
 ![](https://gimg2.gateimg.com/image/article/17273373844.jpg)
Source: AICoin
 
This macro liquidity tightening often disrupts the upward trend of the crypto market, but it does not explain why BTC, SOL, and other prices can remain relatively strong, while ETH continues to be sluggish in the same environment. So we also need to consider changes in market structure and issues within Ethereum itself.
 
Although spot ETFs for <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> and Ethereum successfully launched this year, institutional investors are very cautious about Ethereum, especially Grayscale Ethereum Trust, which has experienced large-scale fund withdrawals after transforming into ETFs. The aggressive selling behavior of major market makers may have exacerbated the downward trend in prices.
 
However, when it comes to the Ethereum ecosystem itself, the development of Ethereum in the direction of Rollup scalability has not been smooth. The scalability issue that was considered during the initial design did not arise. Instead, the lack of on-chain interaction, extensive adoption of Layer1, and fungible competition in Layer2 have led to insufficient value capture and value diversion in Ethereum itself.
 
A deeply concerning reality is that the decrease in gas fees on the Ethereum network has led to a reduction in destroyed ETH and an increase in net supply, which may suppress price increases in the short term and even trigger interpretations of the death spiral.
 ![](https://gimg2.gateimg.com/image/article/17273374505.jpg)
Source: ultrasound.money
 
In summary, the reasons for the low price of Ethereum are multifaceted, including the macroeconomic environment, Ethereum's own technological and competitive issues, and market cycle fluctuations. However, it is important to note that Ethereum has not seen a new growth point like DeFi Summer to drive on chain economic prosperity for a long time.
 
## Can Ethereum Rise to Prominence?
Despite facing some challenges and uncertainties, such as FUD sentiment, price fluctuations, and technological bottlenecks, overall, the core driving force and spirit of Ethereum remain solid, and the foundation is still exploring innovative solutions in anti-censorship and scaling technologies, demonstrating its determination to making progress and adapting to market demand.
 
On the technical level, Ethereum, with its profound technical foundation and technological innovation, such as research and progress in zero knowledge (ZK) proof, verifiable delay function (VDF) and other technical fields, undoubtedly provides strong support for the explosion of new applications. This helps attract more developers and users, and promotes the continuous growth of decentralized applications (dApps), further consolidating its leading position in the industry.
 
In addition, Ethereum has demonstrated strong capabilities in business orientation and ecosystem building. Although competitors such as Solana have advantages in usability, Ethereum built a vibrant and constantly expanding ecosystem with its good industry reputation, standardized operating procedures, and large developer community. This ecosystem advantage has laid a solid foundation for the long-term development of Ethereum.
 
We look forward to the flourishing development of the Restaking track and the upcoming Prague upgrade at the end of the year, which may further unleash the value of the Ethereum ecosystem and drive positive price discovery.
 ![](https://gimg2.gateimg.com/image/article/17273375596.jpg)
Source: @vitalik
 
Of course, the gradual adoption of institutional investors has added more confidence to the future of Ethereum. With the gradual maturity of the crypto market and the improvement of liquidity in the capital market, the adoption rate of Ethereum is expected to accelerate, further driving its value enhancement.

Finally, from the weekly chart of ETH/BTC, after more than two years of oscillation and downward trend, the exchange rate has fallen to the technical support level ahead, and indicators such as MACD show expectations of a rebound after oversold. This may indicate that the price of ETH will usher in a phase of strong performance.
 ![](https://gimg2.gateimg.com/image/article/17273375847.jpg)
Source: Gate.io
 
In summary, although Ethereum currently faces challenges and uncertainties, its core driving force, technological innovation, ecosystem advantages, and support from institutional investors collectively constitute the key factors driving its future development. Therefore, we remain optimistic about the future of Ethereum and look forward to it leading the development trend of the blockchain industry while addressing the current predicament.

<div class="blog-details-info">
<div>Author:**Carl Y.**, Gate.io Researcher
<div>Translator:Joy Z.
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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