Ethereum Hits 4-Year Low Amid Investor Concerns
Key Takeaways
- Ethereum (ETH) drops to its lowest level since 2020 – approximately 45% price loss since the beginning of the year
- Decline in active addresses and transaction fees indicates decreasing network activity
- Post-Dencun upgrade, inflation rises – burn mechanism loses effectiveness
- Compared to Bitcoin, Ethereum shows significantly weaker performance
- The upcoming Pectra upgrade aims to counteract this – success remains to be seen
Ethereum Under Pressure: Price Hits 5-Year Low
Ethereum has lost significant value in recent months. The price dropped to around USD 1,800 – a level last seen in 2020. Since the beginning of the year, the decline totals approximately 45%. In comparison, Bitcoin lost only about 10% over the same period. This development highlights that Ethereum is currently facing specific challenges that go beyond general market trends.
Decline in Network Activity
A key factor in the price drop is the decreasing activity on the Ethereum network. According to data from CryptoQuant, the number of active addresses has fallen from around 525,000 to approximately 333,000. Burned transaction fees – a measure of network usage – have also declined significantly. Less activity means lower fees, which in turn reduces the effectiveness of the burn mechanism.
Inflation Following the Dencun Upgrade
The Dencun upgrade was intended to improve Ethereum’s scalability and efficiency. However, the measure had unexpected consequences: transaction volumes declined, and with them the amount of ETH burned. This has led to an increase in the total supply of Ethereum – a clear shift from a deflationary to an inflationary model.
Before the Dencun upgrade, the network had developed a deflationary tendency through the so-called Merge: more ETH was being burned than newly created. This trend is now reversing. Inflation is putting additional pressure on the price, as a growing supply with stagnant or falling demand drives prices down.
Loss of Investor Confidence
The weak price performance and rising inflation have shaken the confidence of many investors. While Bitcoin has shown relative stability in a difficult market environment, Ethereum has lost significantly more ground. This points to structural issues that cannot be explained solely by external factors such as macroeconomic developments.
Outlook: Hope for the Pectra Upgrade
The next major upgrade, called Pectra, is scheduled for April 30, 2025. Its goal is to further optimize the network and bring inflation back under control. Whether it will succeed remains uncertain. The key will be whether network activity increases again and the burn mechanism becomes effective once more.
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Our Assessment
Ethereum is currently at a critical juncture. The sharp price decline, decreasing usage, and return to inflation pose major challenges for the project. A quick recovery is unlikely in the short term. In the long term, much will depend on whether upcoming upgrades like Pectra deliver the desired results. Anyone invested in or considering investing in Ethereum should closely monitor future developments and take both technical and fundamental factors into account.
Sources
- CryptoQuant
- TradingView
| Symbol | ETH |
| Coin type | Alt Coin |
| Transaction Speed | Medium |
| Pros |
|
| Cons |
|
| Further practical applications | |
| Price | $1,816.31 |
| 24h % | 1.77 % |
| 7d % | -3.14 % |
| 30d % | -18.10 % |
| 60d % | -34.45 % |
| 1y % | -46.00 % |
| Market Cap | $218,716,679,460.00 |
| Official Links | Website | Source Code |
| Socials | Reddit | X |
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