Outside Source
“Solana is the biggest slap in the face” for Ether maximalists due to its monolithic scalability approach, according to the analyst.
News
Ether remains stuck in a seven-month downtrend as competition among top blockchain networks continues, threatening further declines for the world’s second-largest cryptocurrency.
The price of Ether (ETH) has fallen more than 36% in the past seven months, from a yearly high of $4,111 in March 2024 to its current level of $2,600, according to Cointelegraph data.
ETH/USD, 1-year chart. Source: Cointelegraph
The sluggish price action could be attributed to Ethereum losing ground in the battle for layer-1 (L1) blockchain innovation, according to pseudonymous crypto analyst Ignas.
The analyst wrote in an Oct. 16 X post:
“Overall, Ethereum isn’t the winner of the L1 wars. The value accrual from all L2s is not yet clear as well.”
“That’s a good thing” for the crypto industry, Ignas added, as it can still leave room for growth for other L1 networks that may be more suited to different use cases.
The L1 war refers to the race between top blockchain networks like Ethereum, Solana, Avalanche and Fantom to solve the blockchain trilemma, which looks to balance security and scalability without sacrificing a reasonable degree of decentralization.
Ethereum L2s, price performance. Source: Ignas
Is Solana attracting Ether’s market share?
Another reason for Ether’s sluggish price momentum could be the value fragmentation caused by Ethereum L2 networks, which attract Ethereum ecosystem investment into their native currencies.
Related: Ethereum validators up 30% in a year, driven by institutional adoption
This could make monolithic blockchains like Solana more attractive for investors, wrote Ignas:
“Solana is the biggest slap in the face of ETH Maxis. As more L2s kept launching, the liquidity and UX fragmentation problems worsened. With each L2, Solana’s monolithic approach became more attractive.”
Ethereum’s ecosystem fragmentation led to ETH holders selling for other L1 tokens like Sol (SOL), according to Ignas.
SOl vs. ETH, 1-year chart. Source: Cointelegraph
The SOL token has significantly outperformed Ether’s price. Over the past year, Solana has risen over 552%, while Ether rose 57%.
Yet, Solana remains in a seven-month downtrend since March 2024, mirroring Ether’s price action.
Related: Trump pump? Bitcoin climbs to 2.5-month high as Trump widens lead
Will Ether price correct to $2,400?
Ether could be setting up for a correction based on technical trading patterns.
An emerging technical pattern on the one-hour chart suggests that ETH could see a correction to above $2,400, according to crypto trader Justin Bennet. He wrote in an Oct. 17 X post:
“It’s not a pattern I trade, but $ETH could be forming a diamond reversal pattern. The objective is $2,485 if it confirms with a close below support.”
ETH/USD, 1-hour chart. Source: Justin Bennett
Bitcoin (BTC) is also struggling to break its 217-day downtrend, pressuring the wider cryptocurrency market.
Magazine: Proposed change could save Ethereum from L2 ‘roadmap to hell’
This article first appeared at Cointelegraph.com News
