Ether has been trading within a narrow $230 range since August 9, maintaining solid support at $2,550. However, this marks a significant 20% decline from just three weeks ago when ETH closed July above $3,300.
This downturn is part of a broader contraction in cryptocurrency prices, but Ethereum is facing unique challenges. Over the past week, the Ethereum network’s decentralized applications (DApps) have seen a notable 33% drop in activity.
Spot Ether ETF Outflows and Weak Network Activity Pressure ETH Price
Ether’s struggle to maintain bullish momentum can be partially blamed on the underwhelming performance of spot Ether exchange-traded funds (ETFs). Data from Farside Investors reveals that these ETFs have experienced a combined $30 million in net outflows since August 9. Despite hopes that inflows from major players like BlackRock and Fidelity would offset these losses, this has yet to materialize.
Although Ethereum continues to lead in total value locked (TVL) and transaction volumes, its significantly higher fees compared to competitors create challenges. "The user experience on Ethereum does not favor second-layer solutions," an analyst noted, which has allowed niche markets to gain traction on alternative networks such as Solana, BNB Chain, and TON. Notably, none of the top 12 DApps by user count are currently based on Ethereum, according to DappRadar.
For instance, Ethereum’s top-performing DApp, Uniswap, reported 114,180 active addresses over the past week. In contrast, Solana’s Pump.fun attracted 225,110 active addresses, and BNB Chain’s Move Stake saw 213,010.
However, this comparison does not fully capture the activity within Ethereum’s layer-2 ecosystem, which includes solutions like Base, Optimism, and Arbitrum. These layer-2 solutions hit an all-time high of 348 transactions per second on August 17, according to L2Beat.
Ethereum TVL Rises, But On-Chain Volumes Decline
While users value Ethereum’s network security for final settlements, this focus leads to lower demand for ETH as transactions are aggregated. A decline in Ethereum’s base layer activity can negatively impact ETH prices, even as its layer-2 ecosystem grows. DappRadar data indicates a significant drop in Ethereum network activity over the past week, raising concerns among investors.
Ethereum experienced a 33% decline in 7-day volumes, dropping to $39.04 billion. This trend was mirrored across its competitors, with BNB Chain seeing a 26% reduction in activity, Solana’s volumes decreasing by 23%, and TON facing a 46% drop in the same period. This widespread decline suggests a general decrease in sector interest rather than issues specific to Ethereum.
On a more positive note, Ethereum’s total value locked (TVL) grew by 9% over the past 30 days, reaching ETH 18.6 million on August 18, according to DefiLlama data. In contrast, BNB Chain’s deposits in BNB fell by 3%, and Tron’s TVL in TRX terms declined by 7%. This divergence reflects medium-term investor confidence in Ethereum’s price.
Highlights for the Ethereum network include the Symbiotic restaking solution, which reached $1.58 billion in deposits, and the Magpie Ecosystem, a decentralized finance and yield platform, topping $1.37 billion. While the broader decline in cryptocurrency interest, as seen in falling prices and on-chain metrics, suggests that Ethereum may face challenges in reclaiming the $3,300 level, the reduced DApp volumes are not a cause for immediate concern.
