Ethereum (ETH) has faced persistent resistance at the $2,500 mark, failing to maintain a rally above this crucial level. Since the crypto sell-off in early August, ETH has made several attempts to recover but continues to struggle, with data signaling potential further downside. Below, we examine the key factors weighing on ETH’s price trajectory.
Weak Spot ETF Flows Add Pressure
Despite high expectations for Ethereum exchange-traded funds (ETFs) to boost ETH’s price, investor interest has been disappointing. Spot Ethereum ETFs launched in the United States on July 23, but they have since recorded significant outflows. CoinShares’ latest report highlights $478.5 million in cumulative outflows, with $10.9 million leaving the funds on November 1 alone. In stark contrast, Bitcoin ETFs have enjoyed stronger institutional interest, contributing to Bitcoin’s recent highs. This lack of support has been a headwind for ETH, which investors hoped would benefit similarly from ETF inflows.
ETH/USD daily chart. Source: TradingView
Rising Layer-1 Competition
Ethereum’s high transaction fees have opened the door for alternative layer-1 blockchains, such as Solana and Avalanche, which offer lower fees and greater scalability. While Ethereum has seen some relief from layer-2 solutions, competitors have gained traction. Data shows Ethereum’s unique active wallets fell by 16% over the last month, while Solana and Avalanche saw increases of 19% and 75%, respectively. Additionally, Ethereum’s network volume dropped by 9.6% as users migrated to lower-cost chains.
Declining Market Dominance
ETH’s market dominance has dropped to a 42-month low of 13%, as Ethereum struggles to retain market share against both Bitcoin and other altcoins. In 2024, Ether has continued to lose ground, with experts suggesting its market position heavily depends on a reversal in ETF inflows. Prominent analyst Max Price commented, “Follow the money; I’d only consider moving into ETH if ETF inflows start to pick up.” Meanwhile, technical analyst The Great Martis warns of potential bearish breakdowns, with ETH possibly dipping below $1,000.
Spot Ether ETF flows table. Source: Farside Investors
As Ethereum grapples with these pressures, a sustained break above $2,500 remains uncertain, leaving market watchers to monitor ETF flows and competitive dynamics closely.
