The performance of the most popular altcoin on the market, Ethereum (ETH), has been hampered in recent months by issues with its network.
As these issues persist, ETH’s price woes may last longer than expected.
Ethereum Faces Low User Activity, ETF Sees Outflows
The Ethereum network has seen a decline in user demand over the past few months. Artemis data shows that the number of unique active addresses that have completed at least one transaction on the Layer 1 (L1) network has fallen by 6% over the past 90 days.
A decline in the number of active users on a blockchain network typically results in a decline in the number of daily transactions, and Ethereum has experienced this trend over the past 90 days. On-chain data shows that Ethereum’s daily transactions have fallen by 5%.
This decline in user activity has also impacted network fees. According to DefiLlama, Ethereum network fees fell to $3.1 million by the week ending August 31, the lowest in more than four years.
While the decline in Ethereum activity may indicate successful adoption of Layer 2 (L2) scaling solutions, it poses a long-term risk to the network. If users increasingly migrate to L2 networks for transactions, the Ethereum base layer could see a decline in economic activity and revenue over time.
In addition to network issues, Ethereum is facing another problem: outflows from spot ETH exchange-traded funds (ETFs). Despite high expectations that these ETFs will lift market sentiment, they have been steadily recording weekly outflows. Since their launch on July 26, the funds have seen inflows in just one week. Now, in their seventh week, outflows have exceeded $750 million.
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ETH Price Prediction: Buyers and Sellers Watch From the Sidelines
Ethereum (ETH) is currently trading at $2,411. The altcoin has been in a horizontal channel for the past month due to a balance between buying and selling pressure.
Since moving sideways on August 8, Ethereum price has encountered resistance at $2,755 and found support at $2,317. The altcoin’s flat RSI reflects indecision among market participants who are waiting for a catalyst that will either trigger a breakout above resistance or a fall below support.
If the altcoin sees renewed buying activity, it could push its price above the resistance, causing it to trade at $2,868. If the accumulation gains momentum, it could rise above the $3,000 price level and change hands at $3,102.
Read More: Ethereum (ETH) Price Prediction 2024/2025/2030
However, if selling pressure intensifies, ETH will break through the support level and its price will fall to $2,111, the low last seen during the general market crash on August 5.
