3 reasons why ETH price performance is lower than other altcoins


ETH price increased by 6.2% from November 3 to November 5, but the altcoin struggled to break the $1,900 resistance. Despite the current bullish trend, ETH’s 17% return over the past 30 days cannot compare to Bitcoin’s impressive 27% gain over the same period.

Legal barriers and criticisms of ecosystem centralization

Analysts attributed ETH’s underperformance to uncertainty around Consensys, a key company in the Ethereum ecosystem. Former employees filed a lawsuit against the company and its co-founder, Joseph Lubin. More than 20 shareholders of Swiss holding company Consensys AG claim that Ethereum co-founder Lubin violated a “non-dilution commitment” made in 2015.

Consensys is responsible for developing and hosting critical infrastructure projects for the Ethereum network. The company was founded in October 2014, about nine months after the launch of the Ethereum blockchain in mid-2015. Furthermore, the Supreme Court in Zug, Switzerland, ruled in favor of the plaintiffs, adding to the current unrest.

Regulatory challenges have hindered the growth of the Ethereum ecosystem. The latest concern today is PayPal’s USD-pegged stablecoin PYUSD, which operates on the Ethereum network. The token is designed for digital payments and Web3 applications. On November 2, PayPal disclosed the subpoena it received from the U.S. Securities and Exchange Commission (SEC).

In addition to regulatory pressure, there has been significant criticism of the decentralization of financial applications within the Ethereum network. Chainlink, the preferred solution for oracle services, has quietly reduced the number of participants in its multisig wallet from 4/9 to 4/8. Analysts also highlighted the lack of governance among ordinary users as a key issue.

ETH’s underperformance compared to altcoins is evidence of many other issues

Several major altcoins including SOL, XRP and ADA have outperformed ETH, with returns of 75.5%, 37% and 35% respectively over the past 30 days. This disparity suggests that factors hindering ETH’s development are not simply related to regulatory pressure or reduced demand in the DeFi and NFT markets.

A pressing issue facing the Ethereum network is the high gas fees associated with transactions, including those executed using smart contracts. The average transaction fee in the last seven days was $4.90, negatively impacting decentralized application (DApp) usage.

Additionally, total deposits (in ETH) on the Ethereum network have fallen to their lowest levels since August 2020. It should be noted that this analysis does not consider the impact of native Ethereum staking.


Total application deposit more than Ethereum Network ETH | Source: DefiLlama

According to DefiLlama data, on November 5, the total locked value (TVL) of Ethereum DApps was 12.7 million ETH, down 4% from 13.2 million two months ago. In comparison, TVL on the Tron network has grown by 13% over the same period, while Arbitrum’s deposits remain at 1 million ETH. DApp activity data on the Ethereum network shows a decrease in activity.


this Ethereum network leads DApp with 30-day active addresses | Source: DappRadar

Even excluding the Uniswap NFT aggregator’s massive 60% drop, the average number of active addresses for the network’s top DApps fell 3% month-on-month. By comparison, Solana’s top apps saw an average of 18% growth in active users over the same period, according to DappRadar data.

Finally, on-chain activity shows an increase in users depositing ETH on exchanges. While these data don’t necessarily point to a short-term sell-off, analysts generally view the coin supply as a precautionary measure.


Exchange’s 7-day average daily ETH deposits | Source: coin indicator

The current average daily deposit volume of ETH is 255,614 coins, an increase of 30% from two weeks ago, indicating that as the price of ETH approaches $1,900, holders are more inclined to sell.

Data shows that declining TVL, weakening DApp activity, and a higher proportion of ETH tokens deposited on exchanges are negatively impacting the price’s ability to break above the $1,900 resistance level. This price point may be more difficult than initially expected, and ETH bears can now breathe a sigh of relief.

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According to Cointelegraph


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