30s Summary

Between October 1 and 8, Ether’s price fell by 7.3%, mirroring a downturn in the wider altcoin market, and creating uncertainty about its recovery to $2,600. The trend is partly due to underperformance of US Ether ETFs and competition from scalable blockchain networks like Solana and BNB Chain. Ethereum’s DApps also face challenges, evidenced by the fall in DEX volumes from 64% in January 2023 to 22% now. Despite Ethereum’s use of scaling solutions, some validators may be less committed due to inflation and low transaction fees. The rise of ethereum as an alternative to stocks and VC compounds these issues.

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Between October 1 and 8, Ether’s (ETH) price slipped down 7.3%, wiping out the gains it had made in two weeks before. This drop parallels what happened in the wider altcoin market, meaning Ethereum itself might not be the only factor causing this. This has left people trading Ether a bit unsure about whether the cryptocurrency can climb back up to $2,600.

Judging from what people are thinking and saying, the feelings about Ether are kinda all over the place. Since September 1, Ether’s price has gone down by 2% but at the same time, the altcoin market cap has gone up by 4.5%. Part of this could come from how America’s Ether ETFs (exchange-traded funds) haven’t done so well recently – they haven’t seen any inflows since October 7 and they lost a whopping $548 million since they first came out in July, according to Farside Investors’ data.

To add to all of this, Ethereum’s DApps (decentralized apps) face some pretty intense rivalry from blockchain networks that focus on being scalable. Examples include Solana (SOL), BNB Chain (BNB), Tron (TRX), Avalanche (AVAX), and Sui. Even though people have pointed out the centralization risk, these networks have managed to lock in a total of $19.5 billion. That’s 43% of what’s deposited in Ethereum, which is $45.6 billion.

Ethereum’s also seen a considerable dip in its DEX (decentralized exchange) volumes. It went from 64% in January 2023 down to just 22% now, with Solana now at the top. This throws Ethereum’s position as leader into question, which has people trading Ether worried that the price might keep going down.

With all this said, die-hard Ether fans would argue that Ethereum’s leadership stance is solid when you add in scaling solutions like Base, Arbitrum, Polygon, and Optimism. Base, for example, has seen an impressive rise from holding less than 1% of the market to now having 14% in just seven months.

That being said, it’s important to note that these layer-2 networks lower base layer fees by using aggregation techniques and optimizing data storage space. But, while Ethereum’s ecosystem’s been growing, the base network is dealing with a steady rate of transactions, causing Ether investors to feel a degree of frustration.

When we’re not seeing much going on with Ethereum’s network, that can lead to less desirable results. For one, Ether turns inflationary – this happens when there’s low competition for processing power. That means there’s a reduction in demand for block space and less transaction fees, which makes some network validators less inclined to keep the network secure.

Something unexpected came up when BlackRock, a big name when it comes to Ether ETFs, said that Ether offers more for those happy to take risks in their investments. So, it’s being seen as something that’s a competitor to stocks and venture capital. This is different to Bitcoin, which people usually see as a form of “digital gold”.

Further adding to these complications, the vice chairman of S&P Global, Daniel Yergin, reportedly told CNBC that the world’s economy is about to enter a risky time as tensions rise in the Middle East, coupled with China wanting less oil. What’s more concerning is China’s main stock market index (CSI 300) closed 9% lower on October 8. This was even after the National Development and Reform Commission gave details about its upcoming economic boost plan.

With investors being less willing to take risks and Ethereum having a bunch of stiff competition, it’s looking less likely that Ether may get back to the $2,600 mark anytime soon. Please note, this is just general info and shouldn’t be seen as legal or investment advice.

Source: Cointelegraph