Source: Cointelegraph
Original: “Is $1,400 the ‘Generational Bottom’ for Ethereum (ETH)? — Data Signals Mixed”
Ethereum has broken through $1,700 after 16 days of selling pressure, which stemmed from macroeconomic uncertainty and a sharp decline in on-chain activity. Despite the rebound, Ethereum's performance still lags behind the overall altcoin market, with its year-to-date gains falling 23% below the market average.
Some traders claim that Ethereum is poised for a “generational” bull market by offering a “truly decentralized” and permissionless financial system, but is that really the case?
Ethereum is one of the few major cryptocurrencies that has not set a new all-time high by 2025, unlike competitors such as Solana (SOL), Tron (TRX), and BNB.
Some critics argue that abandoning proof-of-work (PoW) mining has caused Ethereum to lose its competitive edge against rivals.
Declining Ethereum Fees Signal Weakness in Price
Ultimately, despite the lack of strong fundamentals supporting long-term price growth, Ethereum may still outperform its competitors in the short term, and those predicting a “generational bottom” may celebrate their prophecies coming true. However, considering that Ethereum transaction fees have dropped 95% since January, the likelihood of an immediate surge in Ethereum's price seems low.
The low demand for data processing on the Ethereum network has led to inflation in Ethereum, as the built-in burn mechanism is insufficient to balance the newly issued tokens that cover staking rewards.
Although Ethereum is a clear leader in total value locked (TVL), traders generally show little interest in this metric, as it has not translated into higher demand for the Ethereum network or an increase in Ethereum's scarcity.
Therefore, even if Ethereum's fundamentals improve, the optimism among Ethereum holders is declining, while competitors—especially Solana and Ripple (XRP) investors—are hopeful about the approval of their spot ETFs in the U.S. Currently, U.S. spot ETFs are only available for Bitcoin and Ethereum, so the launch of more spot ETFs could reduce institutional demand for altcoins.
Further exacerbating concerns, U.S.-listed spot Ethereum ETFs experienced a net outflow of $10 million between April 21 and April 23, while similar Bitcoin ETFs saw record inflows.
Historical Data Shows Ethereum Price Rebounds Rarely Last Long
Historical evidence does not support Ethereum's long-term outperformance over competitors, reducing the likelihood of sustained price increases for Ethereum.
For example, Ethereum's market share hit a low of about 26.5% in June 2022 when its price fell below $1,100. After a rapid rebound in August 2022, the price rose to $2,000, but this momentum quickly faded, and Ethereum's price fell below $1,200 again in less than three months. This sudden correction likely frustrated many investors, as they had to wait eight months for Ethereum to break through $2,000 again in April 2023.
A similar pattern occurred in April 2021 when Ethereum's market share in the altcoin market dropped to 26.8%. Subsequently, Ethereum's price soared from $2,100 to $4,200, but fell below $2,000 again in the following month. Likewise, those who bought near the cycle peak had to wait six months to recover their investments. This history teaches Ethereum traders to take quick profits, which also reduces the likelihood of setting new all-time highs.
It is difficult to determine what triggered previous bull markets for Ethereum, especially with the changing narratives from utility tokens to the NFT market, artificial intelligence, meme coins, and most recently, RWA tokenization. While some influencers believe Ethereum will have strong upward momentum, there are also warnings that Ethereum could drop another 15% compared to Bitcoin's performance.
Ultimately, historical evidence does not support sustained price increases for Ethereum, even if it reaches a bottom in market capitalization relative to the broader altcoin market.
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in this article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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