Ethereum price remains under pressure, and has hit a crucial resistance as its average transaction fees crash. ETH was trading at $1,810 on Wednesday, up by over 30% from the lowest level this month. This article explains why the coin has plummeted from its high of $4,100 last year to its current price of $1,810.
Ethereum transaction fees have plunged
The first chart above shows that the average transaction fees on Ethereum network has continued falling this year. According to Santiment, the fees stand at $0.142 on Wednesday, down from last November’s high of $2.3. It has also dropped sharply from the 2021 high of almost $70.
Ethereum’s network fee is determined by demand for its solutions, like decentralized finance (DeFi) and stablecoins. When demand for these services is rising, users bid higher prices, which drives the average costs up, and vice versa. Therefore, the falling transaction fees is a sign that demand for its network remains significantly low.
A likely reason for this is that many users have turned to layer-2 networks like Base and Arbitrum. These networks continue to attract more users, who are drawn by their superior speeds and lower costs.
This trend explains why Ethereum has been overtaken by other networks in terms of fees this year. It has made just $241 million this year, much lower than Tron’s $1.08 billion and Solana’s $403 million.
Number of Ethereum active addresses has stalled
The chart above also explains why the Ethereum price has crashed. This chart shows that the number of daily active addresses in the network has stalled in the past few months.
It had 413,000 active addresses on April 30, down from the year-to-date high of 737,000, which occurred in February. The chart shows that the address growth has stalled. Ideally, you would expect its price to do well when the figure is growing.
Other top chains are seeing higher active addresses. Solana had over 26.2 million transactions in the last seven days, while Tron and BNB Chain had 5.5 million and 5.2 million, respectively.
Read more: Ethereum price prediction March: Is another 50% crash possible?
ETH transaction count has dropped
More data indicates that the number of daily transactions on the Ethereum network has decreased recently. This chart further reinforces the findings presented in the other two charts. Ethereum’s network handled 7.69 million transactions on April 30, down from this month’s high of 11.4 million.
Other blockchain networks are experiencing a significant increase in transaction volume. For example, Solana handled over 418 million transactions in the last seven days, which is equivalent to 59 million a day. Similarly, Tron handled 57 million transactions in the last seven days or 8 million a day.
Ethereum is losing market share
Further data shows that Ethereum is not the dominant player it was in the decentralized finance industry a few years ago. It has been overtaken by Solana, which handled over $68 billion in the last seven days. Ethereum handled over $56 billion in this period.
At the same time, other networks like Sui, Unichain, Tron, and Base have continued to capture its market share.
Ethereum price formed a triple-top
The other important chart to watch is Ethereum’s weekly chart. As shown above, the coin formed a triple top pattern at the resistance point of $4,078. This is usually one of the most bearish chart patterns.
The coin has also plunged below the neckline at $2,130, its lowest level on August 5. Therefore, there is a risk that the coin will continue falling, with the next point to watch being at $1,000. This target is derived by measuring the depth of the double top and then extrapolating it from the neckline.
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