3 reasons why the price of Ethereum is lower than altcoins

The price of Ether (ETH) increased by 6.2% from November 3 to November 5, but the altcoin had trouble breaking the $1,900 resistance. Despite the current bullish trend, Ether's 17% return over the past 30 days is smaller than Bitcoin's (BTC) impressive 27% return over the same period.

Central criticisms of regulatory barriers and ecology remain.

Analysts attribute some of Ether's underperformance to uncertainty surrounding Consensys, a key player in the Ethereum ecosystem. Former employees filed a lawsuit against the company and co-founder Joseph Lubin. More than two dozen shareholders of Switzerland-based Consensus AG said Lubin, the Ethereum co-founder, violated an “indissoluble covenant” he made in 2015.

Consensus is responsible for developing and managing critical infrastructure projects for the Ethereum network. In the year It was founded in October 2014, nine months before the launch of the Ethereum blockchain in mid-2015. In addition, the Swiss High Court of Zug rejected the plaintiffs' case, adding to the current unrest.

Regulatory challenges have hindered the growth of the Ethereum ecosystem. Recent concerns have centered on PayPal's US dollar-pegged stablecoin, PYUSD, on the Ethereum network. This token is designed for digital payments and Web3 applications. In the year On November 2, PayPal disclosed the subpoena it received from the US Securities and Exchange Commission (SEC).

In addition to regulatory pressures, there is criticism of decentralized financial applications (DeFi) in the Ethereum network. Chainlink, the preferred Oracle service, has quietly reduced the number of participants in its multi-signature wallet from 4-of-9 to 4-of-8. Analysts have pointed to the perceived lack of management by regular users as a major issue.

Ether's underperformance for altcoins is evidence of other issues.

Several major altcoins, including Solana (SOL), XRP, and Cardano (ADA), have outperformed Ether by 75.5%, 37%, and 35% over the past 30 days, respectively. This difference suggests that the reasons behind ETH's ban are not solely related to regulatory pressure or declining demand in the DeFi and NFT markets.

One concern for the Ethereum network is the high gas fees associated with transactions, including those executed through smart contracts. The latest 7-day average transaction fee was $4.90, which negatively impacted the use of decentralized applications (DApps).

Total deposits on the Ethereum network have dropped to their lowest level since August 2020. It should be noted that this analysis does not take into account the impact of the native Ethereum stock.

According to Defillama data, the total value of Ethereum DApps was locked at 12.7 million ETH on November 5 (TVL), a decrease of 4% from 13.2 million ETH two months ago. In comparison, TVL on the Tron network increased by 13% during the same period, while Arbitrum deposits remained at 1 million ETH. Data on DApps activity on the Ethereum network supports the idea of ​​reduced activity.

Excluding the massive 60% drop in the Uniswap NFT Aggregator, the average number of active addresses on the Ethereum network is down 3% compared to last month. In contrast, Solana's top apps saw an average increase of 18% in active users over the same period, Dapradar data shows.

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Finally, the on-chain activity reflects the increase in user deposits on exchanges. Although this data does not indicate a short sale, the mere presence of the coins is seen by analysts as a precautionary measure.

The current daily ETH deposit average of 255,614 represents a 30% increase from two weeks ago, indicating that holders are willing to sell more as the Ether price approaches $1,900.

The data suggests that TVL declines, DApps activity decline, and high ETH exchange deposits are negatively impacting Ether's chances of breaking the $1,900 resistance. The price level may be more challenging than initially expected and for now ether bears can take a breather.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.