30s Summary

Ether, the second largest cryptocurrency, has lost 36% of its value since March 2024 due to increasing competition among top blockchain networks. Crypto analyst, Ignas, attributes this to Ethereum’s inability to lead in layer-1 (L1) blockchain innovation, leading to value fragmentation as Ethereum L2 networks draw investments away. Ignas suggests Ether holders may be switching investments to L1 tokens like Solana, whose tokens have seen a 552% rise compared to Ether’s 57%. However, technical patterns suggest Ether’s price might stabilize around $2,400. Bitcoin also struggles with a 217-day downtrend, which adds pressure on the entire crypto market.

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Ether, the world’s second largest cryptocurrency, has been seeing a steady drop in its value over the past seven months, largely due to stiffening competition among top blockchain networks. It has lost a whopping 36% of its value since March 2024, with its price falling from $4,111 to about $2,600.

Some experts attribute this downward trend to Etherium’s failed bid to lead the way in layer-1 (L1) blockchain innovation. A crypto analyst going by the name Ignas believes that Etherium is losing out in what he calls the “L1 wars,” and this is affecting prices of the Ether cryptocurrency.

According to Ignas, the solution to the blockchain trilemma (balancing security and scalability without losing decentralization) might come from other L1 networks tailored to different uses.

Ether’s falling prices could be due to what he calls value fragmentation, which happens as Ethereum L2 networks draw investment away, towards their native currencies. This might make other blockchains, such as Solana, more attractive to investors.

Ignas also suggests that Ether holder may be switching their investments to other L1 tokens like Solana (SOL). This assertion seems to be backed by the fact that Solana’s SOL tokens have drastically outperformed Ether’s price, with a 552% rise in the past year compared to Ether’s 57%.

But like Ether, Solana too is facing a seven-month downward trend since March 2024.

The data could indicate that Ether’s price might adjust to around $2,400, based on certain technical patterns detected by crypto trader Justin Bennet.

However, it’s important to know that Bitcoin (BTC), another major player in the cryptocurrency universe, is also struggling to break its 217-day downtrend, putting additional stress on the entire crypto market.

Source: Cointelegraph