Ethereum Faces Network Shakeup: These Key Trends Point to Market Shifts

Samuel Edyme

9 months ago

3 mins read

Ethereum Faces Network Shakeup: These Key Trends Point to Market Shifts

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Ethereum, the second-largest cryptocurrency by market cap, has recently shown signs of a shifting market sentiment and momentum, according to an analysis by a CryptoQuant analyst named Percival.

The analyst disclosed that various market conditions and technological developments have impacted Ethereum’s momentum and have led to mixed views on its future growth trajectory.

Ethereum’s Market Sees Shift

Percival, highlighted that Ethereum has faced a decline in activity due to the rise of other blockchains with greater accessibility, more advanced technology, and faster update cycles.

According to the analyst, “the positive Momentum sentiment is far below expectations.” So far, the open interest in Ethereum futures—a measure of capital flowing into derivative contracts—reached $9.2 billion, with a notable inflow of $2.12 billion in August 2024.

Ethereum open interest on all exchanges. | Source: CryptoQuant

This represents a 30% rise but pales compared to the $6 billion inflow observed between April and May, reflecting only half of that previous momentum.

Another major observation of the analysis was the “Coinbase Premium Gap,” indicating the differential between the price of Ethereum on Coinbase and other global exchanges.

Ethereum Coinbase premium gap. | Source: CryptoQuant

A slowdown in selling pressure from US-based investors suggests a possible positive shift in market sentiment. However, the market is still waiting for a significant influx of capital to drive a strong rally for Ethereum.

The analyst pointed out that any future price recovery would depend on substantial investment inflows, which have yet to materialize.

Furthermore, after the Federal Open Market Committee’s (FOMC) announcements, Ethereum’s gas fees surged, hinting at a possible shift of capital from traditional treasuries into decentralized finance (DeFi).

The analyst mentioned an instance: the DeFi lending platform Aave, which operates on the ETH network, has seen a moderate rise in fee collection, from $42 million in March to $43 million in August.

Ethereum Network Lags Behind

While Percival noted that from an economic perspective, Ethereum needs to revert to its max fee pass gas mean, aligning its growth with its intrinsic value, the analyst also suggests that Ethereum currently faces several internal gaps.

Although the technology ecosystem around Ethereum is expanding, the network seems to be lagging behind the competition, according to Percival. The CryptoQuant analyst reveals that this disconnect between Ethereum’s capabilities and its technological rivals has led to a significant shortfall in investment.

Moreover, the limited inflow of small capital and lack of consistent use suggest that even minor investments are not being sustained over time.

The analyst’s take is further validated by the fact that Ethereum’s network has faced increased competition from alternative blockchains like Solana, Binance Smart Chain, and others that boast higher transaction speeds and lower fees.

This has, to some extent, diverted attention and investment from Ethereum to these newer ecosystems.

Ethereum (ETH) price chart on TradingView — ETH price is moving downwards on the 2-hour chart. Source: ETH/USDT on TradingView.com

Featured image created with DALL-E, Chart from TradingView

Samuel Edyme

Meet Samuel Edyme, Nickname - HIM-buktu. A web3 content writer, journalist, and aspiring trader, Edyme is as versatile as they come. With a knack for words and a nose for trends, he has penned pieces for numerous industry player, including AMBCrypto, Blockchain.News, and Blockchain Reporter, among others.

Edyme’s foray into the crypto universe is nothing short of cinematic. His journey began not with a triumphant investment, but with a scam. Yes, a Ponzi scheme that used crypto as payment roped him in. Rather than retreating, he emerged wiser and more determined, channeling his experience into over three years of insightful market analysis.

Before becoming the voice of reason in the crypto space, Edyme was the quintessential crypto degen. He aped into anything that promised a quick buck, anything ape-able, learning the ropes the hard way. These hands-on experience through major market events—like the Terra Luna crash, the wave of bankruptcies in crypto firms, the notorious FTX collapse, and even CZ’s arrest—has honed his keen sense of market dynamics.

When he isn’t crafting engaging crypto content, you’ll find Edyme backtesting charts, studying both forex and synthetic indices. His dedication to mastering the art of trading is as relentless as his pursuit of the next big story. Away from his screens, he can be found in the gym, airpods in, working out and listening to his favorite artist, NF. Or maybe he’s catching some Z’s or scrolling through Elon Musk’s very own X platform—(oops, another screen activity, my bad…)

Well, being an introvert, Edyme thrives in the digital realm, preferring online interaction over offline encounters—(don’t judge, that’s just how he is built). His determination is quite unwavering to be honest, and he embodies the philosophy of continuous improvement, or “kaizen,” striving to be 1% better every day. His mantras, “God knows best” and “Everything is still on track,” reflect his resilient outlook and how he lives his life.

In a nutshell, Samuel Edyme was born efficient, driven by ambition, and perhaps a touch fierce. He’s neither artistic nor unrealistic, and certainly not chauvinistic. Think of him as Bruce Willis in a train wreck—unflappable. Edyme is like trading in your car for a jet—bold. He’s the guy who’d ask his boss for a pay cut just to prove a point—(uhhh…). He is like watching your kid take his first steps. Imagine Bill Gates struggling with rent—okay, maybe that’s a stretch, but you get the idea, yeah. Unbelievable? Yes. Inconceivable? Perhaps.

Edyme sees himself as a fairly reasonable guy, albeit a bit stubborn. Normal to you is not to him. He is not the one to take the easy road, and why would he? That’s just not the way he roll. He has these favorite lyrics from NF’s “Clouds” that resonate deeply with him: “What you think's probably unfeasible, I've done already a hundredfold.”

PS—Edyme is HIM. HIM-buktu. Him-mulation. Him-Kardashian. Himon and Pumba. He even had his DNA tested, and guess what? He’s 100% Him-alayan. Screw it, he ate the opp.

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