Ethereum is currently grappling with significant market and technical challenges, which have contributed to its valuation being 50% below its all-time high of over $4,800. Analysts attribute this downturn to multiple factors, including decreased whale accumulation and interoperability issues, which are complicating its growth trajectory.
#Ethereum whales stopped accumulating $ETH in early July. Since then, they’ve been selling or redistributing their #ETH holdings. pic.twitter.com/ySmQLL7JCD
— Ali (@ali_charts) September 8, 2024
Ethereum has struggled to regain its peak despite positive year-to-date returns. On-chain analyst Ali Martinez pointed out that Ethereum whales have halted accumulation since early July, possibly even offloading their holdings, creating downward pressure on price.
A major issue highlighted by Multicoin partner Kyle Samani is Ethereum’s interoperability problem. Many users find it difficult to move assets across different platforms and networks due to the lack of a universal standard for interoperability. Layer 2 solutions like Polygon, Arbitrum, and Optimism are developing internal standards, but these are not universally applicable across all platforms. This fragmented landscape creates inefficiencies and frustrations for users, contributing to Ethereum’s stagnation.
Samani also emphasised that for a large asset like Ethereum, achieving consistent growth is more difficult due to “financial gravity.” He urged Ethereum to deliver concrete, scalable results to justify its massive $300 billion market cap.
Additionally, Ethereum’s dominance in Total Value Locked (TVL) across networks has declined from over 60% in mid-2023 to 56%, reflecting some market weakness. The blockchain’s technical challenges, coupled with stiff competition from other networks like Solana and BTC, continue to weigh on its price performance.
