Ethereum’s price rally to $3K depends on a few key factors.
The price of Ether (ETH) rose to $2,700 on October 30, marking the highest level in ten days, but the strong rejection on October 31 lowered the price to $2,550. This movement mirrored that of Bitcoin (BTC), which saw a 4% drop from its peak of $73,575 on October 29.
Traders are now wondering what it will take for Ether to return to the $3,000 mark. The answer may lie in reduced transaction fees, greater institutional adoption, and improved incentives for ETH stakes.
Source: JoConcert
By Thea Inc. Joe Consorti, a Bitcoin activist and developer, pointed out that Ethereum exchange-traded funds (ETFs) in the United States failed to gain investor interest, while similar Bitcoin instruments generated $3.3 billion in revenue in one week.
Ethereum is losing market share, and native share is shrinking.
It would be wrong to attribute Ether's failure to trade above $2,700 to weak institutional demand alone. This is more effect than cause. For example, Solana has surpassed Ethereum as the leading blockchain in decentralized application (DApp) transaction volumes.
Decentralized exchange volume per chain, weekly. Source: Defillama
The latest data shows that Solana is leading the decentralized exchange (DEX) in volumes, but critics argue that its network is heavily dependent on the memecoin trading activity that spiked in October. In contrast, Ethereum expects strong demand from decentralized finance (DeFi) applications such as Balancer, Curve, Pendle and Ether.fi.
Ethereum continues to dominate as Layer-2 volumes merge, including networks such as Base, Arbitrum, Polygon, and Avalanche. This dominance is also reflected in Total Value Locked (TVL), with Ethereum's base layer holding $48.8 billion compared to Solana's $6.27 billion. So, even if the memecoin craze continues, it only represents a small part of the wider DApps market.
Despite strong onchain DApp volume of $116 billion in 30 days, according to Dapradar, Ethereum transaction fees have remained stagnant. StakingRewards data shows a reward rate of 3.4% for ETH staking, as opposed to Solana's 6.5% and Tron's 4.5%. As a result, Ethereum saw a net withdrawal of 180,000 ETH during the same period.
High-level blockchains hold data. Source: StakingRewards
Ethereum developers are addressing this concern with the upcoming Ethereum update proposal EIP-7742, which introduces variable blob (temporary data layer) costs and maximum values. Vitalik Buterin discussed the transition to a constant blob count, warning that constant operation at full capacity could hinder expansion.
The Ethereum Pectra update, scheduled for the first quarter of 2025, aims to expand the maximum block size from the current 1 megabyte to 2.7 megabytes, as defined in EIP-7623. The ongoing debate centers on how to reconcile the need for low-cost transactions with the need to adequately reward ETH stock.
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Ether's journey to the $3,000 price has depended heavily on institutional adoption, hampered in part by strict policies from the US Securities and Exchange Commission, which has banned spot claims for Ethereum ETFs that employ statistical strategies. On the contrary, Bitcoin's strict monetary policy has been agreed with some of the world's biggest professional investors.
Once hailed by its supporters as the “ultrasound currency”, the Ethereum network now faces challenges from over-optimization of supply and protection-2 activities, which while operationally beneficial, could compromise security sustainability. Therefore, a sustained ETH price rally may stop at significant changes in the structure of the network.
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.
