Key Points
- Ethereum has lost 24% of its value in the past week, underperforming compared to other major cryptocurrencies.
- Analyst Duo Nine suggests Ethereum’s approach to scalability might be diminishing its token’s value and demand.
In the past week, Ethereum has seen a significant decrease in its value, losing approximately 24%.
This makes it the worst-performing cryptocurrency among the top 10 largest by market capitalization.
Understanding Ethereum’s Decline
Duo Nine, a notable cryptocurrency analyst, has expressed concerns about Ethereum’s current trajectory, even going as far as suggesting that the platform might be “slowly dying”.
He points out that Ethereum’s underperformance, particularly when compared to Bitcoin and Solana, raises serious questions about its future viability.
Duo Nine believes that part of Ethereum’s struggles can be attributed to the “XLM curse”—a situation where a network’s efficiency and cost-effectiveness do not necessarily result in an increased token value.
He further argues that the introduction of Layer 2 solutions like Arbitrum, which have significantly reduced transaction costs, might not be beneficial for Ethereum’s market price in the long run.
According to Duo Nine, this reduced need for Ethereum as a gas token could potentially diminish its relevance and value.
Ethereum’s Economic Model Criticized
Duo Nine also criticizes Ethereum’s economic model, which now has an inflationary token supply, allegedly to cover operational costs not met by transaction fees alone.
He argues that this adds downward pressure on Ethereum’s price and indicates a bearish signal for the asset.
Additionally, the analyst suggests that the competitive pressure from Solana and other altcoins further complicates Ethereum’s position.
He questions whether the significant reduction in fees was a strategic error, as maintaining demand sufficient to support the reduced fees is challenging and could ultimately place downward pressure on Ethereum’s price.
In the broader market, Ethereum’s metrics provide a mixed picture.
The number of active addresses has fluctuated significantly, suggesting that while the network remains active, user confidence could be waning.
On the financial side, Ethereum’s open interest fell by 3.60% in just one day, while the open interest volume saw a rise of 3.96%, indicating a complex interplay of investment behaviors.
