Over the past few months, Ethereum has been on a steep decline, culminating in a low in market dominance not seen since 2020. According to recent data, Ethereum’s market share has fallen to just 8.5%, reflecting a series of internal challenges and changes in the cryptocurrency ecosystem. At the time of publication, the price of ETH is quoted at $1,885.30, down 2.5% in the last 24 hours.
One of the main factors behind this significant drop is the intensification of selling. Ki Young Ju, CEO of CryptoQuant, highlighted an increase in sales that directly impacted the price and perception of value of Ethereum. “There was an unprecedented wave of selling,” says Ju, highlighting the selling pressure that has overwhelmed the market over the past three months.
Meanwhile, the emergence of scalability solutions known as Layer 2 (L2) blockchains has also played a crucial role. Camila Russo, a cryptocurrency analyst, points out that while L2s have contributed to improving the efficiency of the Ethereum network, they have failed to sustain a positive impact on the price of ETH. “The rise of L2 blockchains is a double-edged sword for Ethereum, improving usability but not necessarily market value,” explains Russo.
Furthermore, technical complexity and governance challenges have been critically addressed by developers and analysts. Uncle Rockstar, an influential developer in the Ethereum community, has been openly critical of the direction the project has taken. “Ethereum has strayed from its original mission and the technical complexity has only increased, which has eventually led to significant security breaches,” comments Rockstar, referring to security incidents that have resulted in substantial losses.
The lack of a clear and compelling narrative was also highlighted by Tür Demeester, a consultant at Blockstream, as a hurdle for Ethereum. According to Demeester, the inability to maintain a compelling story has made it difficult for Ethereum to position itself against more dynamic narratives in the cryptocurrency market. “Ethereum has run out of stories to tell,” he says critically.
Regulatory uncertainty is another aspect that concerns investors and analysts. Unlike Bitcoin, which is widely recognized as a commodity, Ethereum faces classification challenges that could influence its institutional adoption and regulation. Francisco Quartin de Macedo, an expert on crypto monetary policy, points out that “transparency in Ethereum’s monetary policy has reduced after recent updates, which adds a layer of uncertainty to its future.”